Ian Pearson: Again, I am happy to agree. Public confidence in the decommissioning process is important. I recognise that greater transparency is required if both sides of the community are to be satisfied, and, as the hon. Gentleman will be aware, that is certainly something under detailed discussion.

Barry Gardiner: My right hon. Friend will appreciate that the five tests are beyond my ministerial portfolio. He is right to highlight the fact that in Derry and other parts of Northern Ireland it is extremely important that we offer tourists what they want, part of which is being able to do business in euros—people expect that when come from Europe. Northern Ireland is the only part of the United Kingdom that shares a land border with the eurozone, so it is doubly important that such a facility is available. That shows, once again, the strides that tourism is making in Northern Ireland to meet customers' needs.

Seamus Mallon: The outgoing Metropolitan Police Commissioner, Sir John Stevens, has stated on the record that there were substantial links between Northern Ireland authorities and an illegal paramilitary organisation, and that that collusion resulted in a number of deaths, including that of Pat Finucane. Does the Secretary of State agree that the public and the family of Pat Finucane have a right to know what those links are and how long they lasted? Does he further agree that the links between the authorities and a terrorist organisation can be properly established only by a fully independent tribunal that deliberates in public and has restrictions placed on its findings?

Tony Blair: We did not accept this recommendation because we believe that it is better to appoint people on an individual, case-by-case basis. The right hon. and learned Gentleman talks about the speed of the inquiry's being set up, but the allegations were made on the Sunday in the newspapers, and that day, at the insistence of the Home Secretary, somebody was appointed to examine them. I hope that the right hon. and learned Gentleman would agree that Sir Alan Budd is a man of independence and unimpeachable integrity. He will have the opportunity to look at the facts of the case and to make those facts known to the public. I cannot see what is wrong with that way of proceeding.

Bill Wiggin: On 21 June, the Prime Minister wrote to me following the two tragic road deaths at Ashton in my constituency. He said that the Highways Agency would consider what measures would improve safety at the location. On 13 August, the Under-Secretary of State for Transport wrote to tell me that the Highways Agency would report in two months. He said the same on 13 September and on 16 November. On 17 November, Ian Lycett was killed at Ashton in the same place. Does the Prime Minister wonder why people say that he is all talk?

Tony Blair: First, I congratulate Rosy Garnett and all those others who have won awards for taking a stand against antisocial behaviour. In my hon. Friend's constituency and in many others, the new legislation has been well used by the police, local authorities and, most important, local people. There are also record numbers of police officers in my hon. Friend's authority and elsewhere in the country. I assure him that we shall continue supplanting them with community support officers. When the idea of community support officers along with record numbers of police was first introduced in the House, many people opposed it. People are now beginning to see that community support officers are a worthwhile addition to our policing force.

Gary Streeter: Can it possibly be right that after £500,000 of taxpayer's money has already been spent on establishing and promoting a new microsystems company in Plymouth, the entire project has now been lured to Scotland by the promise of additional grants, which are also out of taxpayer's funds? Apart from the crushing blow that that decision has caused to the economy of Plymouth, is it not a terrible waste of public money? If I write to the Prime Minister with more detail about this case—I do not expect him to know the detail today—will he please investigate and find out whether a serious misuse of taxpayer's money has taken place?

Tony Blair: Obviously, I do not know the exact circumstances to which my hon. Friend refers, but if it is as he says, it is an extraordinary thing to have happen. The Government's view is that in relation to causing death by dangerous driving, it is extremely important that we toughen up the measures, not weaken them. I cannot comment on the particular case, and it would not be right for me to do so. Obviously, however, I agree with him on his general point that some idea of compensation culture should not offend common sense.

Tony Blair: I was going to say that we could dissect that question, but it is probably not the right thing to say.
	We pledged to ensure better welfare and better safeguards in animal experiments, and we delivered on that pledge. We have made sure that all experiments that are conducted are conducted according to the tightest possible regulations. It is for precisely that reason that we are in a strong position to say to animal rights extremists that we have tough measures in this country, so there can be no justification whatever for harassing and intimidating people who are going about their lawful business.

Alex Salmond: Does the Prime Minister understand the level of concern in Scotland caused by the Secretary of State for Defence's apparent dismissal of the substantive case for keeping historic Scottish regiments as merely the tartan question? How can Labour be trusted to represent Scottish interests if that is an example of the standard of senior Ministers' thinking? Does the Prime Minister accept that ultimately, this will be a matter for his personal decision, and according to what time scale does he intend to make it?

Orders of the Day
	 — 
	Debate on the Address
	 — 
	[Sixth Day]

Oliver Letwin: I beg to move, as an amendment to the Address, at the end of the Question to add:—
	"but regret that the Gracious Speech contains nothing that will reduce regulation, cut excessive bureaucracy or give the taxpayer value for money; condemn the Treasury for sponsoring 70 new regulations per working day, for blocking real reform of public services and for the consequent failure to deliver cleaner hospitals, school discipline, controlled immigration, more police on the streets and a lower tax economy; further regret that the Gracious Speech contains no measures to reverse the Chancellor's punitive taxation of pension funds and reductions in tax incentives to save which have contributed to cutting the savings ratio by one third whilst household debt now exceeds one trillion pounds; are disturbed that more pensioners are means tested than ever before whilst 2 million pensioners live in poverty; note that the Treasury's failure to provide taxpayer value and the waste of billions of pounds on unnecessary expenditure means that another round of stealth tax rises is inevitable under this Government; and further deplore the fact that there are no measures in the Gracious Speech to reverse the Government's policy of high levels of regulation and taxation which have resulted in the UK slipping from fourth to eleventh in the international competitiveness league and having a lower GDP per head than Ireland.".
	Before I begin discussing the main substance of today's debate, I want to make a few remarks about the Bills in the Queen's Speech relating to the economy. The Treasury's Bill on the merger of the Inland Revenue and Customs and Excise carries our general support, as the Chancellor is aware, although we remain concerned about its practical implementation. We are dealing with two organisations that have between them 250 legacy computer systems and some 13 million customers. It is no mean feat to put them together, and we will want to look at the details extremely carefully.
	Before dealing with the Bills relating to the Department of Trade and Industry, I want to point out that the Queen's Speech does not include two Bills that might conceivably have been expected to be included.
	One is the provision for real estate investment trust rights, and I hope that the Chancellor will confirm that clauses will be forthcoming to deal with the introduction of such rights either in the Finance Bill or by some other means. The Opposition believe that those new vehicles have a great deal to offer to our economy. We would want to ensure that the means by which they are introduced are not over-bureaucratic and restrictive, but we would want to support measures to introduce them into the capital markets.
	Also notable by its absence—it was not present in the Queen's Speech—was any reference to a statistics Bill. I hope that the Government will draw up proposals to deal with the issues raised by the Statistics Commission about the transparency of national statistics. We shall produce proposals in that connection in the next few weeks and I hope that the House will have the opportunity to discuss and debate such matters during this Session.
	In respect of Department of Trade and Industry legislation, the consumer credit Bill carries our general support. We are particularly keen to see some change in the extortionate credit test. As long as the Bill moves towards increasing transparency rather than imposing undue bureaucratic burdens, we will support its gist.
	The equality Bill is in much the same position. The CBI, as the Chancellor will be aware, has warned that the new proposed commission for equality and human rights could too easily become too concerned with enforcement, too bureaucratic and not sufficiently concerned with promoting good practice. We will want to see whether those dangers are apparent in the Bill and we will want to debate the provisions in Committee.
	I now turn to the main subject of today's debate. Tomorrow we will have an opportunity to see the Chancellor launch his personal election campaign with his customary brio and to discuss the very poor fiscal position that he is in. Today I want to take the opportunity to do something different and examine the Chancellor's economic record, which he is both pleased about and proud of. He frequently presents his economic record as being all for the best in the best of all possible worlds—[Interruption.] Government Front Members seem to be very happy about the situation. The Chancellor tells us that it will go on getting better for ever.

Oliver Letwin: The right hon. Gentleman has the uncanny knack of falling into the very trap that I am seeking to set for him. It is perfectly true that we are willing to admit it when things go wrong. The problem that I am about to illustrate is the fact that the Chancellor does not know how to do that.
	The Chancellor is incapable of recognising that the inheritance we built up after the ERM fiasco—I admit that it was a fiasco—was the strongest inheritance that any Chancellor has had in living memory, as is attested by the Prime Minister's economic adviser. As that adviser points out, there is a question mark over the Chancellor's economic performance. Neither the right hon. Gentleman nor the Chancellor are very keen to admit it, so I shall go through the record.
	It is fair to say that the Chancellor is especially proud of his record on stability. He speaks about stability on almost every available occasion. That record of stability has two aspects—fiscal and monetary. However, the remarkable fact about both those forms of stability is that they are due to the fact that the Chancellor has allowed someone else to set the policy. His fiscal stability, which is now running out—we will talk about that tomorrow—derives almost exclusively from the fact that for the first two years the Government's policy on spending was set by my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), the previous Chancellor, whose spending plans the Chancellor obeyed for two years. Had he not done so, he would not be within a million miles of adhering to his golden rule today. Indeed, he would be in the most terrible trouble.
	Monetary stability is admirable, but again that is because the Chancellor has allowed someone else to run monetary policy—the Bank of England.

James Plaskitt: On the subject of fiscal stability, can the right hon. Gentleman remind us what proportion of GDP was Government debt when his party was in office?

Oliver Letwin: I was referring to the Chancellor's statements in the last pre-Budget report. He did not limit himself to three regulations. No, said that he would abolish 147 regulations. Some interesting facts have come to light about those 147 regulations. The starting point of that interest is that the Chancellor was for once—I think it was unique—unduly modest.
	Actually, when we got hold of the list it turned out that he was claiming to be abolishing 159.

Gordon Brown: I will come to all of the shadow Chancellor's claims later in the debate. But is it not remarkable, in a debate about the economy, that he will not concede that we have the lowest inflation for 40 years, that we have the lowest interest rates for 40 years, that we have the highest ever recorded employment in our country's history, and that standards of living have been rising by over 3 per cent. a year—far higher than under the Major Administration?
	I know that the shadow Chancellor may yearn for the good old days of the early 1990s—the good old days when we had 15 per cent. interest rates, the good old days when, under his economic advice, there were 3 million unemployed, the good old days when there were 1¼ million people with negative equity—but any comparison between the record of his Government and the record of ours shows us the facts. On inflation, consumer prices are averaging just 1.3 per cent. on the new index, 2.4 per cent. on the old index, contrasted with 6 per cent. average under the Conservative years. And inflation peaked at 21 per cent. under the party that he represents.
	Interest rates have averaged 5.3 per cent. under Labour. They averaged more than 10 per cent. under the Conservative Government. The mortgage rate—what people have to pay to own their homes—has been 6.1 per cent. under Labour and 11.4 per cent. under the Conservatives. Debt has fallen to just under a third of GDP under Labour. It was 45 per cent. under the Conservatives. We are happy to draw a contrast between the Labour party and the Conservative party: we are the party of sustained growth; they are the party of the two worst recessions since the war.
	The shadow Chancellor has the nerve to give the impression that the good record of the Labour Government exists because we adopted his policies. It is because we refused to adopt his policies that we have a good record. When we froze spending in the first two years of the Labour Government, the last Conservative Chancellor said that he would never have gone through with it.
	As for the independence of the Bank of England, I hope that the shadow Chancellor will have the good grace to apologise to the House because on 11 November 1997 he voted against the Second Reading of the Bill to grant it independence. Not only did he vote against it, but so did the current Leader of the Opposition, who said:
	"The new Labour Government is taking action which I believe is going to damage the future of this country."
	That was not a party that wanted to give the impression, either in private or in public, that it supported the major decision on monetary policy that was taken by Labour.
	I am glad that the shadow deregulation Minister has returned to the shadow Cabinet so that it has a more moderate image and looks more centrist, and therefore appeals to the middle ground. As recently as 30 October 2004 he said about the previous Conservative Government:
	"15 per cent. interest rates, sky-high mortgage arrears, negative equity, bankruptcies, entrepreneurs giving up the ghost on private-run companies and a lot of people losing their jobs. I don't think there was a family in the country that didn't experience at least one of those anguishes. My parents lost their jobs in the recession. A lot of my neighbours lost their houses".
	That is the indictment of the Conservative party, and that is what would happen if it came back into power. I am happy to give way to the shadow deregulation Minister if he wishes to correct that.

Gordon Brown: Of course we supported membership of the ERM, but we did not choose the rate at which that Government joined it, and on which they could not deliver.
	The shadow Chancellor tells us that this Government have a bad record on tax, regulation and productivity. Let us look at what the shadow Cabinet member responsible for deregulation has been telling the City. At the Techlocate conference in London on 13 October 2004, he agreed that the single most important consideration—I hope that the shadow Chancellor is listening, because he may have to adapt his policies as a result of this—is the cost impact of government. He said:
	"Businesses are reluctant to locate in places where: tax rates are high . . . Places like Ireland, the USA, Hong Kong, Singapore and the UK attract because their tax rates for business are low."
	So the shadow deregulation Minister does not describe the condition of the British economy as does the shadow Chancellor, who says that our tax rates are unacceptable, and has told an audience outside the House that tax rates are low.
	The shadow deregulation Minister went on to say:
	"The second most important consideration is a flexible and willing work force. The third issue is access to market and to supplies. The fourth issue is ease of doing business—do you feel happy there? . . . The UK's strong academic links around the world are an important part of our network"
	in finding jobs. Then he said:
	"What are the most attractive locations today?".
	The answer to the shadow Chancellor, who got his figures wrong on productivity and who imagines that every regulation damages business, although business often asks for things to be done, is, according to the shadow deregulation Minister:
	"The lure of the USA; of China; of India; of the UK."
	I am grateful to him, because he has given us a verdict on the Government which we will be able to use during the election campaign. It answers in substantial detail just about every point made by the shadow Chancellor, who claims that he is responsible for the good things that the Labour Government have done.
	What of the next stage: the Queen's Speech itself, and our policies? The shadow Chancellor did not mention the child benefit Bill. It will enable the Government to extend financial support to trainees who are unwaged and to 19-year-olds completing a course of non-advanced educational training. That will remove the disincentives in financial support for young people to stay on in education while at work. With the growth of education maintenance allowances, it will help many of the 100,000 who do not stay in education and training. I hope that the Opposition will support the Bill, even though the right hon. Gentleman did not mention it.
	That leads me to the difference between us and the Conservatives on the other issue of training, employment and opportunities for the future. Our policy is to expand the new deal so that there is a new deal for skills as well as for jobs. In the pre-Budget report tomorrow I shall announce measures that will enable more of the unemployed and those who are inactive, including incapacity benefit claimants, to get the skills to return to work.
	Our policies have created 200,000 more jobs in the UK since a year ago. Two million more people are in work than in 1997—

Gordon Brown: I will give way when the shadow Chancellor has a chance to confirm what I am about to say.
	The right hon. Gentleman said one Sunday that over a six-year period, he would provide the ability for us to spend about £35 billion less per year
	"in the six years that Gordon Brown's spending plans provide for."
	These are the figures. There are cuts of £6 billion in the first year, £14 billion in the second year, £19 billion in the third year, £24 billion in the fourth year, £29 billion in the fifth year and £35 billion in the sixth year. On top of that, the right hon. Gentleman must find additional money. He has allowed his shadow Cabinet colleagues to get out of control. He has allowed them to promise spending commitments all over the place that he has no way of funding.
	Will the right hon. Gentleman confirm that he has to find money to fund 40,000 extra police officers? He would have to find money to fund 20,000 extra prison places. He wants to link the basic state pension to earnings. He would have to afford that over a period. There would be a tenfold increase in drugs rehabilitation places. Only this week there was a new £200 million spending commitment on schools. There is also a national parenting scheme, 20,000 extra special constables, a 15,000 increase in social housing, 10,000 student bursaries, offshore processing and detention centres. I could go through the whole list of spending commitments.
	When Lady Thatcher was Leader of the Conservative party in the 1970s and was facing the 1979 election, her policy was not to make any spending commitments. However, the shadow Chancellor is not only promising to cut public spending with a headline figure of £35 billion but has to find another £15 billion to pay for the spending commitments that he has allowed his shadow Cabinet colleagues to make. There is a gap between the Conservative party's spending commitments and the real world, and it must find £50 billion of cuts, which cannot be achieved by savings on paper clips in the civil and public services.
	The right hon. Gentleman tells us that those cuts can be achieved by efficiency savings throughout the civil service, but that £50 billion is not the only sum that he has to find—he must also account for the £20 billion of Gershon savings. If a Conservative Administration were in power tomorrow, they would be looking for a total of £70 billion of efficiency savings. That is the state of play for the Conservative party. I am happy, if he wishes, to allow him to correct the figure of £50 billion of efficiency savings plus the Gershon savings that would have to be accounted for if he were in government tomorrow.

Vincent Cable: We support the practical measures on the Inland Revenue and Customs and Excise in the Queen's Speech. I am glad that the Government have noted the concerns that I have long expressed about consumer debt, which is to be dealt with in limited but useful legislation that we will support. I also support the sensible suggestion of the right hon. Member for West Dorset (Mr. Letwin) about introducing legislation on the independence of the statistical service. A key theme over the next few days will be the integrity of Government figures, so such legislation would be a useful building block.
	It was clear from his speech that the Chancellor has not listened to the advice from the Chancellor of the Duchy of Lancaster and our man in Brussels to stop boasting about the Government's economic record. However, I am rather on the side of the Chancellor of the Exchequer, because the Government have very little to boast about, and almost all that there is of positive note is on the economic side, so his points about economic stability were fair, as I have always acknowledged.
	As for basic economic growth over the past seven years, the British economy has averaged about 2.8 per cent. a year, a little above the average for the Organisation for Economic Co-operation and Development. Some European countries such as Sweden and Spain are doing better, as is the United States, but we have a perfectly commendable growth rate which—there is no point denying the underlying facts—is the product of a combination of fortunate external circumstances and a favourable international economic environment. The Chancellor has also enjoyed a helpful inheritance, including liberalised labour and financial markets, which have contributed to low inflation. Another helpful factor is sensible economic management, notably monetary policy the independence of which, we all now accept, was a good move.
	The Chancellor began by focusing on fiscal policy, and I am happy to respond to the challenge that he threw down. He obviously finds it psychologically difficult to adjust to an environment in which the Liberal Democrats are more disciplined about public spending than he is, but we shall continue to argue the case for making tough choices in public spending. The Chancellor asked me account for our spending proposals, but it would be useful if he could elaborate on the progress of the Gershon savings exercise. How will he report on that progress? It has never been clear how we would know if the Gershon savings had been realised and there are some opaque memorandums flying around Whitehall on implementing the recommendations. Will the Chancellor therefore undertake to set out concretely how much money is being saved under the Gershon programme year by year? What progress, for example, is he making in reducing the number of procurement agencies? We need to evaluate those concrete steps to be sure that the Government are serious about making savings. Whatever their motivation, we need a proper monitoring mechanism.
	On fiscal policy, the Chancellor will have to acknowledge over the next few days that there is a growing consensus that he has a problem in meeting his fiscal objectives. It is not a political point. The International Monetary Fund, the OECD, the Institute for Fiscal Studies and the National Institute of Economic and Social Research are not politically driven bodies, but they are all arguing that he faces that problem. It may not be a big problem quantitatively—£7 billion, £8 billion or £10 billion is a very large sum to most individuals, but in terms of the economy it is not a very large sum. That is the standard consensus projection of the extent to which the Chancellor will be adrift in respect of his fiscal policy objectives.
	My concern is not the sum of money. Economically, it is not large and could easily be absorbed in the Government's overall borrowing requirements, since the debt position is comfortable. The issue is credibility—fundamental economic credibility. If the Government set tests, they should be able to meet them. The Government clearly understood from the outset that economic credibility was important. Indeed, this year the Nobel prize went to a couple of economists who spoke about the importance of economic credibility. Credibility was what lay behind the decision to establish the Monetary Policy Committee, and it has enhanced the credibility of interest rate setting enormously.
	There is a problem, however, with the way the Government have approached fiscal policy. They set fiscal rules, which are broadly sensible, and more or less followed them, but there is a question about who decides whether those fiscal rules have been met. Will that be determined independently or by the Government? The golden rule is a highly technical area. Even for anoraks, it is a recondite subject. There are a couple of specific issues. First, who evaluates the assumptions that the Government make in their forward projections? At present, the Government invite the National Audit Office, on a restricted basis, to examine those assumptions and pass judgment on them. That is sensible, but the NAO does not have unrestricted access to evaluate the Government's assumptions, and it should.
	The second aspect that is defective is who decides what the golden rule is and whether it has been met. That is a technical point but it is extremely important. Who decides when the cycle started and when it ends? That is a difficult question. In my private sector days, I was once set the problem by my company. If the company had known the answer, it would have saved a lot of money in investing in refineries and chemical plants.
	Somebody must answer the question, and it should not be the Chancellor, but a genuinely independent body. That is why we argue that the National Audit Office should have an enhanced role—economically and technically, it has competent staff—to evaluate the full range of fiscal policy and give an independent judgment on which the Government can then base a credible fiscal policy. There is no party political advantage in arguing for such a structure. It would be in the Government's interest to have a fully credible fiscal policy, which they do not have at present.

Vincent Cable: That was a helpful intervention and I shall bank it for future reference.
	On the wider question of economic policy, we have discussed the rate of economic growth, which is respectable. It would help, though, if instead of looking back, we looked forward. Any honest assessment of the future must be based on the fact that the Government will face economic challenges that will make economic management much more difficult. Some of them are external and the Government have little control over them. It is still possible that we could be hit by a major oil shock. The Saudi Oil Minister was in London yesterday arguing that something of the order of $15 dollars a barrel is still being paid, on account of the political risk arising from the war and enhanced terrorism risk in the middle east. The oil price could get a good deal worse, but it is not a factor that the Government can control.
	A second challenge that is looming is the problem presented by the collapsing dollar. I could make the point that sterling is now higher than at any time since the days of black Monday, but it is not a domestic issue. It relates to the United States. The American currency is collapsing, at least in part because of fiscal irresponsibility caused by a tax-cutting agenda on which, I fear, we differ substantially from the Conservatives. It has had disastrous consequences in the US and it will have a major impact on this country.
	We also have a home-grown problem, which is the problem associated with personal debt, and the linked problem of boom and bust in the housing market. Some revealing figures on personal debt were produced in the past couple of days. People who retire are facing mortgage repayments into retirement—40 per cent. of all mortgage holders face repayments into their retirement, which is twice the level 10 years ago. People are literally paying till they drop because of their mortgage liabilities.
	On the position in the housing market, I have no views—it is not sensible for politicians to have a view on whether it is good for house prices to rise or fall. What is serious is that we have a boom-and-bust environment. Within the past few weeks, we have seen growing evidence of a very substantial collapse in lending and in equity withdrawal, which almost certainly, according to analysis by the Bank of England, will have major economic consequences. I do not raise the matter simply as a problem. It would be helpful if the Government thought through some of the steps that they could take to alleviate the problem. I shall make a few suggestions.

Vincent Cable: Analysis shows that it would make little difference. We would do that to introduce a much fairer tax system in which local taxation is related to people's ability to pay. One-off effects may occur as a result of removing a property tax, but in the long run it should make no difference to the problem that I am describing.
	Long-term growth and the factors that drive it is the third issue that I want to raise. I sympathise with the views expressed by the Conservative spokesman about the Government's remarkable optimism that their intervention in promoting innovation and growth will produce consequences. One of the reasons why I am sceptical about pouring large amounts of money into the Department of Trade and Industry, which does some useful things, is my extreme scepticism about the extent to which that can drive economic growth.
	Scientific research is clearly a Government responsibility: the market will never do it, but it is clearly a public good. That is why I am in favour of, among other things, bee research, which the Chancellor and the Prime Minister found so surprising and amusing. Research is clearly desirable and the Government should fund it. It is, however, another thing to argue that private companies, many of which would invest anyway, should be subsidised to do so, when they can raise money in venture capital markets and from charitable bodies such as the Wellcome Trust. The market enables growing companies to function without large-scale funding from the DTI, and I am sceptical about the role that the Government are playing in driving economic growth.
	The other area of scepticism relates to the complexity of Government regulation. The Chancellor has a view, with which I happen to disagree, that somehow or other the Government can fundamentally change how business behaves and operates. The classic example of that is the belief that the Government have invested in research and development tax credits. R and D tax credits are a superficially attractive idea—"R and D is a good thing. Let's give them a big tax credit to support it."
	All the research done in the past two years shows that R and D tax credits have made no difference to the level of research and development, because most private companies were doing it anyway and the policy has a large associated dead-weight cost. I am not suggesting that we should simply stop that tax credit, but we must evaluate its consequences. The belief that tweaking the tax system and adding great complexity somehow or other changes business behaviour and increases investment, innovation and growth is fundamentally flawed.

Vincent Cable: We have suggested that a better way in which to deal with the position of older pensioners would be to give them a decent, basic old age pension rather than a pension credit. One of the reasons why, which we have debated extensively, is that large numbers of pensioners do not claim pension credit. More seriously, those pensioners who claim face a very high marginal rate of tax—40 per cent. of them pay more than half their marginal income in tax as a result of benefit withdrawal. The system is so pernicious because it is a massive disincentive to save. It does not solve the problem of inequality.
	In conclusion, the Chancellor has let it be known in the press over the past few days that he wants to present himself, his Government and his Budget with a flavour of Britishness. Economic policy will gain a patriotic element, which I appreciate because we all like to feel that we are patriotic rather than nationalistic. Under this Government, however, we have finished up with American levels of inequality, French levels of centralisation and, if the Home Secretary has his way, we will get Chinese levels of civil liberties.

John McFall: I congratulate the shadow Chancellor below the Gangway, the hon. Member for Twickenham (Dr. Cable), on a thoughtful speech. However, his political education would prosper if he read the minutes of the Treasury Committee on both the DTI—the regional development agencies say that it would be a disaster for them if it were taken away—and the R and D tax credit, which, as my hon. Friend the Member for Ochil (Mr. O'Neill) said, is essential to attract large multinational companies in an international competitive environment.
	This debate is an important opportunity to assess the state of the economy and the public finances, which the Treasury Committee will do over the next few weeks when the Chancellor gives his pre-Budget report and appears before the Committee.
	The Committee is interested in two areas; first, the state of the economy and the prospects for growth and secondly, the state of the public finances. As we mentioned in our report last year on the autumn PBR, the IMF has stated that the UK's economic performance is enviable, but there are fresh challenges in relation to growth. As we know, the Monetary Policy Committee has raised interest rates on a number of occasions to the record rate of 4.75 per cent. Some would say that the housing market has gone off the boil, which would have implications for the economy. The risks to the UK economy are largely international, with oil prices at $50 a barrel or so, the implications of the USA's current account deficit for the global economy and the sluggish growth in European countries.
	One of the issues that the Treasury Committee will consider with the Chancellor is how to improve productivity. That has been a centrepiece of the Treasury's aspirations, and it is a challenge to all European economies. When the Chancellor comes before us on 24 February to discuss regional productivity, we will refer to developing countries, the rate of progress of China and India, and how we rise to the challenge of ensuring that regional inequalities in this country are lessened.

John McFall: I signed that EDM, and that is very welcome news. I have an Asda store in my local community, so first thing on Saturday morning I will be in there buying a Band Aid single. I congratulate Woolworths and Asda and ask other retailers to follow their example.
	There are several sobering statistics for us as regarding developing countries. Within 20 years, half the world's manufacturing exports could come from those countries. Already, China is exporting more than France, Italy and the United Kingdom. Indeed, Asia is exporting as much as the European area. We can learn a lot from what is happening in those countries in terms of the need for us to develop our skills in the knowledge economy. We pride ourselves on the information technology graduates who come out of our universities, but India and China are producing 125,000 computer science graduates compared with 5,000 in the UK. The question for us is how to embrace that change and get involved in it.
	Currently, only 1 per cent. of UK exports go to India and China; we need to increase that proportion. In January, the Government are promoting the year of science in China—Lord Sainsbury is going out there—and in December there is a UK financial dialogue taking place with China. I welcome those steps. However, we need progressive policies on science and skills. As a chemistry graduate, I am very sad that Essex university is closing its chemistry department—[Hon. Members: "Exeter."] I meant Exeter university. At a time when the number of science, technology and engineering university applications is falling, we need to do more to encourage those subjects.

Howard Flight: Tomorrow, one way or the other, I believe that we shall hear the Chancellor's last pre-Budget statement. Today, we have heard the Chancellor being, a little unwisely, as complacent and boastful as ever. If he, like me, had got on his bike in the past few weeks and visited the financial community, on which so much of our earnings for our imports depend, he would have found it increasingly concerned about the deterioration in our public finances.
	If I may put it simply, our economy is close to full capacity. The norms of Government borrowing are; borrow when an economy is well below capacity to keep it afloat, but that it is sensible, when an economy is at full capacity, to be in balance or even in surplus. However, our borrowings this year approach £40 billion. We have an external current account deficit that is likely to be around £40 billion. That is not a balanced, well positioned economy. It is irrelevant whether the Chancellor fudges the figures to fulfil the golden rule because the position is the wrong way round. The golden rule makes sense over a cycle if one borrows when there is slack in the economy and moves into surplus when it is at full capacity. Doing it the other way round leaves matters positioned wrongly for the future.
	Estimates of the black hole that would have to be filled by additional taxation if the Government were re-elected vary between £11 billion and £20 billion. The latest City estimates have continued to increase. Again, on the golden rule and the true underlying position, it is disappointing that the Chancellor had to resort to cooking the depreciation figures to squeeze another few billion pounds in his favour. As we all know, instead of treating the cumulative deficit on a numbers basis—adding the pluses and minuses—the Chancellor resorted to a bogus method of average in relation to gross national product, giving a figure that is not the actual monetary cumulative deficit over the cycle.
	My right hon. Friend the Member for West Dorset (Mr. Letwin) went through the wider issues that make it clear that the economy is no longer as well placed as it has been. We have dropped from fourth to eleventh in the world's competitiveness league. We have underperformed when compared with the other English-speaking economies, especially Ireland. Our productivity growth is a third down on what it was under the Conservative Government and below the EU average, when the Chancellor is perhaps among the most critical of EU economic performance.
	The savings ratio is down not only because of the cycle; it has been down by a third on average in the past six or seven years. That presents considerable problems for pension accumulation and investment.
	We still have a stock market, although the Government have done their best to wreck it. They appear to believe that long-term investment can be financed by cashing bonds. A sad disappointment may be encountered. This country's stock market has underperformed by 35 per cent. when compared with the United States and France. It has even underperformed by 10 per cent. when compared with Germany. I do not claim that the stock market constitutes a full measure of the position of an economy but it is ignored at peril. There are serious imbalances in the economy.

Howard Flight: I am pleased to tell the hon. Gentleman that they understand perfectly well what we are saying and that they are surprised that neither the Chancellor nor Labour Members seems to understand. I shall summarise it very simply; perhaps the hon. Gentleman will be able to understand. We have set out our spending strategy, which, instead of the Government spending 42 per cent. of gross domestic product, will result in us getting the figure down to 40 per cent. over the period to 2008. The amounts have been set out bit by bit.
	I and various colleagues set up the taxpayer value review in which 60 people under David James have considered each area of Government. It is not quite complete, but there will be savings significantly in excess of the Gershon savings. Now, let us take those two together. We have made it clear that in some areas additional spending will be needed—for example, in defence, and for our policies of choice in health and education—but the resulting overall position will clearly permit some scope to reduce taxation by a significant amount over the next period of government.

Howard Flight: I thank the hon. Gentleman, but I think that is rather a strange question. The Conservative party has made it quite clear that the David James team is an independent body that is considering the whole public sector and will report back to the Conservative party, which will make its policies very clear when our election manifesto is set out. That is perfectly clear and straightforward.
	The reality is that the Chancellor has presided over a rising tide of personal debt, but he has kept the figures looking good and created hundreds of thousands of public sector jobs, although only 100,000 of the total of 600,000 mean, as he has just said, more people in the front line; more doctors, more nurses and so forth.
	What lies behind what has happened is the tale of the two Chancellors; I am sure Labour Members have read it. William Keegan wrote a superb book entitled "The Prudence of Mr. Gordon Brown", which I was asked to review earlier this year. Indeed, he set it out very clearly that the Chancellor, in his first three years in office, was deliberately prudent to seek to win the longer-term confidence of middle England and the financial community. Then, he embarked on a massive public spending splurge from 2000 onwards.
	It is worth focusing on the macro figures and on the Office for National Statistics figures in relation to that public sector spending. By the end of this tax year, spending and taxation in cash terms will be up by about 60 per cent. The question begs itself; where has all that spending gone? Every citizen knows that they do not see improved delivery of anything like 60 per cent.—[Interruption.] If Labour Members would care to pause for thought, they would realise that the ONS figures show that approximately 80 per cent. of all that spending has been consumed by public sector inflation as the ONS defines it.
	What is public sector inflation? It is a mixture of several things. It is basically higher pay for those working in the public sector and more people; another 600,000. When I was a student economist, I asked my teacher why people earned less in the public sector than in the private. He said that they had greater security of employment and better pensions. That seemed a fair balance to me, but the ONS now shows that, level by level, pay in the public sector is 20 per cent. higher than in the private. Indeed, many of my friends who work in the health service have made the point to me that the money is not getting through for additional facilities, but has come through in significant pay increases.
	Again, we should consider the macro data. In 1997, public sector inflation was 1.6 per cent. It is now running at 10 per cent. We should consider the productivity data. The Government try to hide the figures, but productivity in the public sector has declined by 10 per cent. This is the overall story of failure to reform the public sector, failure to deliver, excessive regulation, excessive bureaucracy and more and more costs between money at the centre and getting it down to the delivery units.
	As William Keegan's book points out, this was the Chancellor's great fear; that people would say, "You've spent all the money, but the delivery is not there. You've wasted it." So, the Chancellor set up his target regime. Alas, that was based on an entirely out of date concept that had not worked in the private sector in the 1970s and 1980s; management by objectives, setting targets from on high and dictating to the people working, rather than bringing them in and getting suggestions from the coal face on how to do things better.
	We have heard little or nothing of the targets regime because, in the main, it has been a failure. Targets have not been met, they have distorted priorities, and they have greatly upset and demotivated people working in the public sector.
	Last summer, I think, the European Central Bank commissioned a group to consider public sector spending in this country compared with that in other countries. It found that, compared with Japan and the United States of America, our public spending was enormously wasteful, citing a figure of 20 per cent. inefficiency. We were only slightly better than France and Germany.
	Now, the ECB is hardly an organ of the Conservative party, but that is the magnitude of the inefficiency of our public sector. Indeed, that is why the Chancellor was eventually obliged to set up his own Gershon review, after we had started work on our review. I have already said quite a bit about that work in answering various questions, but I repeat the point that if the Chancellor wishes to understand what we are saying, rather than ranting a lot of, candidly, gibberish, he should consider what has been announced area by area in the David James review and what the shadow Chancellor said last spring about the spending plans. He will find that the figures add up perfectly logically.

Howard Flight: There are a large number of areas. As the hon. Lady will be aware, broadly, the approach of Gershon has been to say, "Here are areas where money can be saved, such as better procurement and pooling back offices and various other things. Now, civil servants, try to find 2.5 per cent. savings." I was contacted by a friend who has been seconded to the Home Office who said that people there said, "We have not even got proper financial accounts to know what we are spending and how, and how we can effect the economies." That is a measure of how unsatisfactorily our public sector is run.
	Broadly, the James review has considered matters area by area, detail by detail; in only a few areas has Gershon done that. I suggest that the hon. Lady would get an answer to her question if she read the summary reports of the James review and noticed that Gershon has not covered any of that territory.
	I want to move on to two other big areas, but the essence of the point—I am concerned about complacency and, candidly, so is the City—is that everybody knows that this country cannot afford not to reduce tax and regulation. We face the challenge of Asia. Most service businesses can move elsewhere and this country has become considerably less competitive. Capital inflows are trailing off quite worryingly and those who come to Europe increasingly go to central Europe, not this country. Unless we make our economy a good deal more competitive, we will have a less promising future than the Chancellor seems to think he is presiding over.
	I want to say a little about pensions. Having talked to members of trade unions, I can see that everyone knows that the one thing that the Chancellor has really messed up has been our pension savings. Earlier in the debate, the Chancellor referred to my comments about the British stock market having halved. He does not seem to understand that as a result, first, of the £5 billion removal of advance corporation tax credit, the stock market fell 20 per cent. further than it needed to have done, because stock markets bottom when dividend yields cross over gilt yields. Logically, had 20 per cent. of dividend yields not been removed, the stock market would have bottomed 25 per cent. higher than it did. The extent of the fall led to forced selling by pension schemes, life companies and individuals, and a fall of 50 per cent. has understandably destroyed investors' confidence. If citizens no longer have confidence in long-term equity saving, it will not be possible for the whole economy to move forward satisfactorily, as that is where the money comes from for real investments.
	A stock market fall of that extent, to which I referred at the time, has had a disastrous effect on equity savings, leading to the unwillingness of people to save. So far this year, there have been net withdrawals from individual savings account schemes. What bigger measure can one have of the loss of equity confidence? Again, if people think that pension funds will be able to accumulate enough through investing in bonds and cash, another thought is coming to them. The only way in which a sufficient amount can be accumulated over the long term is through successful equity investment.
	My real criticism is not just of the £5 billion per annum that the Chancellor has taken away, but of the knock-on effects, which have been enormously greater. Outstanding final salary schemes still have deficits of around £100 billion. Coincidentally, if a price-earnings multiple is applied to the £5 billion loss of income—a multiple of 20 is a fair average—that is equal to exactly the £100 billion that is missing. More than 10,000 schemes have gone into wind-up, affecting more than 300,000 individuals. As the National Association of Pension Funds has recently warned, three quarters of employers' final salary schemes are facing funding difficulties. As companies must put that money into their pension schemes, that reduces their profits, and as their profits are hit, faith in equity investment in this country is hit.
	I say to the Chancellor that the voters of Britain—not just the financial community—understand what has happened and do not like it. They are well aware of the biggest single area in which he has failed seriously.

Martin O'Neill: I think that the Ford PAG group, of which Jaguar, Land Rover and Volvo are all part, is vital to the high-quality end of British car manufacturing. We all want those companies to succeed, and I think we are confident that they can. The difficulty, especially in Jaguar's case, is short-term, and we hope that it can be solved. Sometimes when we start discussing the prospects of companies here, we draw attention to them in ways that may not be intended.
	Let me take up a point that was made earlier. The Government should realise that if we are to have a research and development-led industry and promote the transfer of technology from the university laboratory to the workshop and larger areas of production, we must be sensitive to the plight of the unincorporated bodies that universities have created. That is an example of the law of unintended consequences, and I shall be very disappointed if the Chancellor does not find a way of dealing with it constructively and sympathetically. It may not be appropriate for him to refer to it tomorrow, but he could do so in his Budget speech, and it could be addressed in the Finance Bill. It should be recognised that it is through investment in science in the United Kingdom that we shall secure continuing development of science-based industry.
	We keep talking about India and China in debates of this kind, but they are not necessarily the same. India has been able to invest in its fantastic output of graduates and in the Bangalore information technology areas, to provide world leadership, and to make a far more significant economic contribution than is represented by a couple of hundred thousand jobs in call centres. Apart from outsourcing and those call centre jobs, there are 200 million people in India who would be classified as middle-class. They are potential consumers of many of our goods and services—financial services, Burberry raincoats and scarves, Johnny Walker Black Label and all the luxury products that so many of our businesses should be getting out there and selling.
	Many of our ambassadors should recognise that they are there not just to outsource but to outsell those in other parts of the world. Conservatism, with a small "c", and protectionism feature in the thinking of too many of our people.
	China is a slightly different matter. It is self-evident that Taiwan, the offshore part of China, has turned its back on the type of manufacturing for which it was famed in the 1950s, 60s, 70s and 80s. It is now the largest single inward investor in mainland China. Its kit is being produced in China and returning to Taipei and the surrounding area, where only the widgets are added. China may be a workshop, but in Beijing and Shanghai it can be seen that there is a demand for consumer goods. It may not extend much beyond those cities at present, but it will do so at a great rate; and if we are not there selling those goods, you can bet your bottom dollar that the Italians, the Germans and others will be. We must organise a much more concerted push to sell our luxury products.

Malcolm Bruce: Perhaps it is appropriate that I should be called after that little diatribe. I should tell the hon. Member for Ochil (Mr. O'Neill) that we Liberal Democrats certainly do not regard energy as a niche market. We have consistently argued—the point is made in our published policy papers—that energy should be dealt with by a department of energy, environment and transport. If we are to meet our Kyoto objectives, it is logical that all the factors that cause emissions be dealt with together, rather than being split among several Departments. I hope that that illustrates that the essence of what we are trying to do is to simplify government, reduce the number of Departments and operate more efficiently.
	We believe that it is inefficient for the Government, through the Department of Trade and Industry, to engage with industry by trying to second-guess the market and using taxpayers' money to induce businesses to take decisions that they would take anyway—in which case, the money has been wasted—or to take short-term decisions in order to qualify for tax incentives that do not stick in the long term. There is plenty of evidence to show that in many cases companies are happy to take the money, but that they take a different decision when the money runs out. We are talking about substantial sums, and we have set out the figures in our existing policy documents. We will publish in more detail the logical consistency of our proposals.
	I am very happy to debate this issue with the hon. Member for Ochil, and let us be clear: there can be an honest difference of opinion about the proper role of Government in business and industry. In our view, that role is to make life simpler and less regulated, to simplify the tax system and to enable businesses to get on with the job that they do best: running themselves, rather than having to engage too much with civil servants, and having bureaucracies tell them how to run their affairs.
	I want to address one or two issues that are of concern to my constituents, as well as other aspects of economic policy. As a Scottish Member of this Parliament, I hope that in the coming years we will develop greater co-operation between Scottish MPs and the Scottish Parliament. Like every Member of this House, I am very worried about the GP out-of-hours service. This issue is relevant to today's debate because it shows there is a crossover in respect of what this Parliament does and what the devolved Parliaments do. Health is a devolved matter, but of course the reality is that the change in the out-of-hours contract was determined by negotiation across the UK. That GPs no longer wish to work such hours might be a reasonable proposition, but it causes difficulties across the piece. UK Ministers need to work with the devolved Assemblies to ensure that we train enough doctors and consultants to cover the service and fill the gaps. I hope that we can do so in future.
	I am also concerned about transport. Two of the transport Bills proposed in the Queen's Speech have implications for my constituents, and we need to know the reality of the situation. Are we getting a significant devolution of strategic decision making to Scotland, or does such legislation constitute an abdication of responsibility for those living north of the border? That issue needs to be clarified.
	My constituents were incensed when the Strategic Rail Authority said that it would no longer support the upgrading of the service between Aberdeen and Inverness because of the unexpectedly high and over-budget cost of upgrading the west coast main line. That service runs from London to Glasgow—in other words, it terminates 140 miles from Aberdeen. Although it may be of some benefit to my constituents, most of the traffic between Aberdeen and London is on the east coast main line. It is therefore frustrating to be told that the upgrading of a line that does not directly serve my constituents is being used to justify the cancelling of promised investment.
	If the devolution of funding to the Scottish Parliament enables the reinstating of such investment, that would be welcome. If, on the other hand, it means that the UK Government are simply abdicating their responsibility for strategic decisions on rail matters affecting my constituents, that is another matter altogether. I was not encouraged on hearing the Under-Secretary of State for Transport, the hon. Member for Plymouth, Devonport (Mr. Jamieson), say that for franchising purposes the east coast main line runs from London to Aberdeen but that for investment purposes it runs from London to Edinburgh. That makes it clear that there is no commitment to strategic investment in that line, even though it is the main line between Edinburgh and Aberdeen.
	It takes nearly as long to get from Aberdeen to Edinburgh as it does to get from Edinburgh to London, despite the fact that the distance involved is little more than 100 miles. If there is to be a strategic decision, it should ensure that remoter parts of the country have access to fast transport, especially given the argument that too many people are flying internally in the UK when they could be taking the train. I would like to agree, but I can assure hon. Members that, as my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith) will confirm, it would be impossible for me to carry out my duties as a constituency Member and to serve in this House if I relied on the rail service. I have no option but to fly, which is regrettable, given the need to address such issues and their long-term environmental consequences.
	I have a constituency interest in energy, an issue to which the hon. Member for Ochil referred, but in this debate I want to link together national and constituency concerns. In some respects, the recent increase in gas and electricity prices is entirely understandable, but in others it cannot be easily explained, and it does not seem to demonstrate the efficient functioning of the market. Those of us who monitor the industry know that many long-term gas contracts have come to an end, at a time when oil prices have been rising sharply. That has become an excuse and created a market gap, which has led to an increase in gas prices, but that does not explain why UK producers are exporting gas to the continent, where prices are lower, rather than supplying the domestic market, where prices are higher—unless there is another, perhaps ulterior motive relating to the long-term control of market supply.
	I have pointed out that we Liberal Democrats are concerned about the fact that this country's emissions are increasing, despite our obligations and commitments under Kyoto. I do not regard rising energy prices as inherently bad, given that such increases probably encourage the more efficient and environmentally sound use of energy. We nevertheless have to accept that if they jeopardise businesses and increase fuel poverty before the mechanisms to deal with such poverty have come into play, genuine concerns will be expressed in all constituencies, including mine.

Denzil Davies: I do not know how it will unwind. There have been calls for China to be brought increasingly among the main economic nations, but the Chinese will probably go their own way and make their own decisions in their long-term trading and security interests.
	The pressures on the US are considerable. An American think-tank recently looked at the prices of products in the US and in China. Prices in China were 30 to 50 per cent. below the cost of production of similar or identical products in the US. Such pressure cannot continue without destroying a country's industrial and economic base. It will mean a massive transfer of wealth from the US, which is already happening, and ultimately from the countries of western Europe to China and other Asian countries.
	The European Union used to believe that it was immune from such pressures. Those of us who have sat through many debates on the EU remember that it was said that one of the reasons for its formation was that it could be ring-fenced. The common agricultural policy was a manifestation of that thinking. The countries of the EU, it was believed, could trade with each other and would not need to trade with anyone else. However, that world is going or has gone. Apparently, 10 years ago the EU had a surplus on its trading account with the countries of Asia and China. It now has a deficit of $10 billion, and that is with a low rate of European growth. The EU is not capable of withstanding the pressures that we will see from China and other Asian countries.
	The problem is not only the balance of payments, but costs, wages and profits. The pressure on wages is now considerable. Last month, the average yearly increase in wages was 3.7 per cent., which is well below the Bank of England's 4.5 per cent. figure used in analysis of inflation and other factors. The minimum wage of £4.85 is fine, but my impression is that wages, certainly in the manufacturing sector, are gradually being driven down towards £4.85. That figure is seen as a respectable amount, so the pressure driving wages down is considerable. Of course, that has implications for the Chancellor. He subsidises wages through the working tax credit, and the cost of that subsidy will probably increase.
	If costs cannot be reduced and prices cannot be increased, companies' profits will be affected. If profits do not go up, investment cannot be made. What about the effect on tax yields? No one has studied the effect of globalisation on tax yields, but if wages are driven down, yields from income tax will fall, unless more people can find work. Indeed, the Chancellor's estimate of revenue from income tax fell short. VAT is a tax on prices. If the price of imported goods falls, and the price of domestically created goods falls in competition, the VAT yield will be reduced. Perhaps that can be made up by VAT on services or in other ways, but the fact remains that globalisation pushes down wages, costs and prices. If it pushes down profits, the yield from corporation tax will also fall. Governments may have to look at other ways of raising money from taxation other than the main taxes of income tax, VAT and corporation tax, because of the effect of globalisation.
	In many ways, globalisation has had a benign effect on inflation. Prices have been driven down. The high inflation of the 1980s has gone, mainly because of competitive global pressures. Japan still has zero interest rates, because some people are now more worried about deflation than inflation. Alan Greenspan in the US was so worried about deflation that he reduced American interest rates to almost 1 per cent., although they have now gone up by a few quarters of a percentage point.
	Our central bankers still try to claim the credit for reducing inflation. We have heard again today how wonderful the Bank of England is, and I bow at the shrine, albeit a little reluctantly. We have heard how wonderful it has been in keeping down inflation, but that is putting the cart before the horse. It is international competition that has pushed down prices. The governors of central banks, who are usually behind the curve, follow that by reducing interest rates. I accept that that is not a fashionable view, but I believe it is a better explanation.
	The trouble is that those central bankers keep looking for inflation everywhere; they are a bit like generals who cannot find an enemy. For central bankers, the reds are still under the bed, and they are inflation. The Bank of England looks for inflation all over the place. I do not know how an interest rate of 4.7 per cent. can be justified when the consumer price index, flawed as it may be, is only, as the Chancellor told us, 1.2 per cent. It was a mistake for the Bank to raise interest rates on the last few occasions so that the rate is now 4.7 per cent. The signals coming from the Bank are extremely confusing, almost as confused as the Organisation for Economic Co-operation and Development report about which I read in the newspaper today.
	We cannot wish away globalisation. Some of the effects have been benign and beneficial, as I have tried to point out, but there is a danger when a huge country such as China begins to dominate world trade in goods and can make such inroads into the productive capacity of western countries. We have to consider whether we can bear the substantial transfer of wealth from western countries to such countries, as the effects on standards of living, taxation yields and public expenditure will be considerable. The time is past when globalisation can be viewed merely as a consequence of free trade and countries such as China can be described as trading partners rather than as competitors. That type of imbalance makes a mockery of Ricardo's economic tenet that trade is good for all, because each country can export the products that it is good at making. That is no longer the case when a country such as China could completely dominate world trade.
	It will not be easy to try to alleviate the consequences of globalisation and to stem the seepage of wealth from western economies, but we should at least recognise that there is a problem and that it cannot simply be left to the free market. Governments, whether of the left or the right, will have to interfere again to protect their economies, industries and societies from the pressure from free trade and globalisation. Once we acknowledge that there is a problem, perhaps we can find ways of countering it.

Mark Prisk: My hon. Friend the Member for Havant (Mr. Willetts) highlighted the change that will happen, but if the hon. Gentleman were to talk to the businesses in Wolverhampton he would find a very different picture from that portrayed in the Government statistics that happily spew out of Whitehall. Indeed, I have found that, for many small entrepreneurs, the problem is one of time. The Federation of Small Businesses found that the average time involved in dealing with the cumulative impact of regulations is now over 28 hours a working month. Many of those present will realise what an impact on family time that clearly has on many small businesses, and it is an unsustainable burden. That is why more and more of what I would describe as the serial entrepreneurs—the people who create and recreate enterprises—the people whom we want to keep, are retiring or selling up. That is a significant drain on the skills and the ambition that this country can ill afford to lose.
	Over the past seven years, the tax system, as part of the regulatory burden, has become hideously complex. I am delighted that the Chief Secretary to the Treasury has joined us, albeit briefly. He will recall that this year's Finance Bill contained 310 clauses and more than 500 pages of new tax rules and regulations.

Mark Prisk: Labour Members might regard that as lovely, but I suspect that their view is not shared by their taxpaying voters. It is a symptom of a Chancellor who, frankly, cannot help meddling, interfering and tinkering. Every year we have a raft of new rates, thresholds and rules. Let me, if I may, offer a classic example of that, which directly affects small businesses.
	In 2002, the Chancellor introduced a zero rate of corporation tax on the first £10,000 of profits—apparently a very good idea, although the Government had not looked at it carefully. Of course it created a significant tax advantage for small firms to incorporate. Indeed, as I recall, the Paymaster General told us that this was a gift horse, which small businesses should not look at in the mouth. That was the exact quote; I apologise for the English. However, the result, of which the Government had been warned, was a massive 43 per cent. increase in incorporations in the first 12 months. That was far more than the Government had expected, so suddenly they realised that they were losing more than £1 billion, as I understand it, in tax revenue that they had not accounted for. Suddenly, we were warned by the Paymaster General that this was not a gift horse but a tax avoidance scheme—what a farce! To compound the error, they have proceeded not to reverse the policy and admit their own error but instead to add a further change with a 19 per cent. non-corporate distribution tax rate, to try to recoup the loss. Therefore small businesses have in three years seen four changes on different rates, which directly impact on their profitability. That is a measure of the tinkering and meddling of this Chancellor.

Tom Clarke: I would do a great disservice to the facts, and not reflect the views of pensioners in my constituency, were I to do as the hon. Gentleman asks. I do not know the figures for his constituency, but I am sure that he is broad-minded enough to acknowledge that the 3,775 pensioner householders in my constituency who now benefit from pension credit, which is worth an average of £41 a week, did not receive that under a Conservative Government. That is a welcome change.
	Had I said before 1997 that the Government would be able to manage such a turnaround of fortune for my constituents, and for millions of other people the length and breadth of Britain, my claim would have been greeted with sheer derision by Conservative Members—or at least, by those who attended such a debate; there are few present today. One of the reasons for the deep gloom that I observe among Opposition Members is that the Government's record has wiped the smile off their faces and encouraged a real glow among millions of vulnerable people, including pensioners.
	Let me give an example: only last week I received a phone call from a woman who had just collected £400 to help with heating and council tax. She said, "Mr. Clarke, I would like to thank you very much. I am 82 years of age and I have never held that amount of money in my hand in my life." Little wonder, when we consider how few years the Labour Government have been in office compared with the Governments of the past century.
	The Queen's speech is not only about young people and the elderly, important though they are; it is about children, too. The Conservatives left us a shameful legacy in the form of one of the highest rates of child poverty in Europe: one in three children were living in real poverty. Our mission to end child poverty is grounded in our determination to secure social justice. I shall not be satisfied until child poverty is abolished completely, at home and abroad. I heard what the Chancellor had to say today about his policies on international development, but domestically, child tax credit and working tax credit awards are helping 6,400 hard-working families in my constituency alone. I welcome that.
	Having taken the courageous decision to give freedom to the Bank of England, we must not, and will not, repeat the mistakes of the past. We shall never return Britain to the boom and bust of the 1980s and early 1990s, when mortgage rates hit 15 per cent. for a whole year—my constituents will certainly never forget that—the homes of 250,000 families were repossessed, and 1.5 million suffered negative equity. People are proud of their homes; home provides a sense of security and much happiness for many. That is why mortgage rates are of the utmost importance to the electorate. Sustained low rates are saving mortgage payers an average of £2,600 a year—almost £220 a month—compared with life under the Conservatives.
	Last week the Leader of the Opposition was campaigning in Cornwall—a county bereft of Tory MPs. The right hon. and learned Member for Folkestone and Hythe (Mr. Howard) took over from the right hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) a year ago, but the polls suggest that he is just as unpopular with the voters. No wonder the mild-mannered, erudite Jeremy Paxman, who covered the visit, headlined the report "Same Old Tories". That reminds me of the past.
	"Fifty years ago was the decade in which Prime Minister Harold Macmillan told us we'd never had it so good. Life in the 1950s was considered to be simpler, better and free from the ills of modern society . . . That's the theory. In practice, a survey suggests that life is much better now than it was 50 years ago. In 2004 we are generally more prosperous, do not work as hard and enjoy a far more comfortable lifestyle than in 1954."
	I have quoted from last Monday's edition of the Daily Mail, so it is official. As Macmillan said, we have never had it so good. In view of the Chancellor's impressive handling of the economy, unmatched for a very long time, perhaps we should brace ourselves for the Daily Mail's next headline, "Britain under Brown is even better".
	Returning to my main theme—jobs in my constituency—I shall set out two excellent examples and refer to two separate issues on which I believe the Government must do more.Within the village of Gartcosh in my constituency there is a large derelict site. Under the previous Government it was a thriving steel strip mill employing 600 workers. Since the closure, which I campaigned against, I have continued my campaign to have the site redeveloped and prepared for meaningful jobs.
	I am delighted to say that last month I learned that Scotland is to get a new-style crime-fighting agency, which will gather together several key law enforcement agencies on one site, and it will be based in a purpose-built headquarters at Gartcosh. Discussions about the new centre of excellence are still at an early stage, but significant resources have been made available to enable planning to get under way. A new organisation will tackle the growing and evolving threat from serious and organised crime—something that is addressed in the Queen's Speech.

Gregory Campbell: In addressing the subject of the Queen's Speech and the economy, I shall dwell on a number of topics. In Northern Ireland over recent years it has been argued that if the economy were made more robust and there were significant investment, that would ensure that in areas where paramilitary groups have a vice-like grip on working class communities, their grip would be broken. I do not subscribe to that theory and have consistently warned against it. However, if that grip can be broken—and we hope that it can be—there is no doubt that a vibrant economy based on a peaceful democratic economic regime would assist local communities to build themselves and improve their local infrastructure. The Government should ensure that that can happen.
	I shall return to the proposition that has been discussed in recent days with the Secretary of State for Northern Ireland. There has been much media speculation in Northern Ireland in recent weeks about a regeneration fund. I know that discussions have taken place between the Treasury and the Northern Ireland Office, and my party and others have engaged in discussions in an effort to establish such a fund. It has been termed a peace fund. The term "peace" has been devalued in Northern Ireland down the years, because of overuse and because it has been applied when anything but peace existed, so I prefer to speak of a regeneration fund. Whatever it is called, it is important that the economy in Northern Ireland should receive as much assistance as it possibly can.
	The Northern Ireland economy has been suppressed for 35 years, principally because of the ongoing regime of violence and terror, the remnants of which we are still dealing with. Compared with the rest of the United Kingdom, salaries are lower than average, we have higher power and electricity prices, we have much worse deprivation levels, and correspondingly, we have significantly worse health and mortality rates across the population. It is essential that the regeneration fund is targeted at alleviating those problems.

Gregory Campbell: The hon. Gentleman obviously was not listening when I outlined some of the reasons why there is such deprivation in Northern Ireland. If other parts of the United Kingdom had been fighting a terrorist war for 35 years, they might well suffer in similar ways. Through the establishment of a regeneration fund, we are endeavouring to make the Northern Ireland economy less—not more—dependent on the public sector. If we get the type of funding that we are looking for, we can ensure that the private sector becomes much more active in Northern Ireland than it has been heretofore.
	For example, tourism is one area in which we can make significant progress in a short time. Other parts of the United Kingdom have greater levels of tourism and experience higher spending per head of population. Again, that is because we are still coming to terms with the aftermath of 35 years of violence, but we hope that violence will come to an end. If we see a definitive end to violence, the tourism sector can take off in a few short years.
	We have a magnificent product to sell. I represent one of the most beautiful coastlines in Northern Ireland. The principal resorts of Portrush, Portstewart and Downhill can take advantage of a significant influx of tourists, providing that we have not only the product, but the marketing and expertise to drive up the spend and ensure that the number of people purchasing the product increases.
	The other issue is the problems that have beset the manufacturing sector, which are not peculiar to Northern Ireland but have afflicted communities across the United Kingdom. The manufacturing sector in Northern Ireland has experienced a particular downturn. I concur with many of the comments made by the hon. Member for Hertford and Stortford (Mr. Prisk) about small and medium-sized enterprises. If our economy gets a significant boost in the next few years, we can significantly increase the SME sector, which could take off as it has not done in the past.
	The Government have funded Invest Northern Ireland, the agency responsible for delivering economic development, to a considerable degree in the two and a half years since its establishment—but many of us are still not impressed by Invest Northern Ireland's results. The economy in Northern Ireland has become more buoyant, as has the economy across the United Kingdom, but I have tabled numerous written questions to try to establish how effective Invest Northern Ireland is at driving potential inward investors beyond the Greater Belfast area. Unfortunately, the answers have been minimal. It appears to many people in Northern Ireland that the body responsible for promoting the economy has a capital city mentality. Invest Northern Ireland does not get out beyond the motorway, and we must try to ensure that it does. It must address that point.
	The Chancellor of the Exchequer could address this issue, and I have written to him on several occasions to try to get him to do so. In Northern Ireland, as in many other parts of the UK, the black economy is prevalent. Other hon. Members and I have lobbied for a significant increase in personal allowances. If, for example, personal allowances and the threshold at which individuals begin to pay national insurance were raised to £10,000 per annum, it would no longer be productive for any small employer to pay someone who is in the black economy and consistently draws benefits.
	That would apply particularly to part-time employment. The part-time economy in Northern Ireland is buoyant, but if the black economy is prevalent, it is a drain on the social security budget. I hope that the Chancellor will reconsider the issue and raise personal allowances significantly above the rate of inflation. If we had, for example, that £10,000 per annum limit, part-time employees could earn £200 per week and pay no income tax or national insurance, and that would reduce the amount of regulation for small employers with such employees.

Gregory Campbell: I thank the hon. Lady. I noticed that the Committee made that announcement just after I tabled the EDM; I do not know if the two things were connected. I heartily recommend that hon. Members sign early-day motion 93, and if the Treasury Committee advocates strong, positive and decisive action in respect of the financial institutions, many of which make hundreds of millions of pounds, in order to assist people in deprived areas, it will be doing a service.

James Plaskitt: I am pleased to follow the hon. Member for East Londonderry (Mr. Campbell) and I endorse the points that he made towards the end of his contribution about charging machines. I shall speak about that subject later.
	I welcome the measures announced in the Queen's Speech that relate to economic affairs, and especially the Government's commitment to introduce a consumer credit Bill. I endorse the comments of other hon. Members, including my right hon. Friend the Member for Dumbarton (Mr. McFall), who chairs the Select Committee on the Treasury. We hope that the Bill will implement many of our Committee's recommendations on consumer credit. I also agree with my right hon. Friend that the matter is urgent. I hope that the measure will be introduced soon so that Parliament can begin work on it.
	The Bill is important because existing consumer credit laws are approximately 30 years old. As the Government rightly stated in the White Paper, "Fair, Clear and Competitive", which was published last year, the need to overhaul consumer credit legislation has become pressing. I am pleased that Conservative and Liberal Democrat Members have so far made broadly positive noises about the Bill. I hope that there will be broad consensus for our reform of consumer credit legislation.
	The need for reform is underlined by the dramatic change in the world of credit since existing credit laws and regulations were written. When the initial legislation was introduced, I believe that only one credit card was in circulation, whereas there are now more than 500. The range of credit facilities is phenomenally greater. The complexity of the marketplace that offers credit bears no resemblance to the simple world that existed when the laws were introduced. Access to many different forms of credit is far easier. It is therefore vital to bring the laws that govern credit up to date .
	Indebtedness is another reason for dealing with credit. The subject has already surfaced in the debate and attention has focused on the fact that total household indebtedness in the UK has passed the £1 trillion mark. The right hon. Member for West Dorset (Mr. Letwin) commented on that. There is no need to get over-excited about the £1 trillion figure. Although it is a new high, it reflects 10 years of growth in the economy and the rise in disposable income. Before becoming too concerned, it is important to stress the balancing figure in the other column, which covers total household assets and wealth. That figure is £6 trillion. The relationship between one and six is reasonably stable and does not suggest an overall problem of indebtedness in the economy. However, in specific sectors and groups of society, there are problems. Some are due to weaknesses in consumer credit legislation. We need to deal with that.

James Plaskitt: The hon. Gentleman is right, and I am right to suggest that there is a growing consensus about such issues. I am happy to endorse his comments. Later, I shall consider other fraud issues, which are also the product of the market's evolution in recent years and underline the need to tackle the matter.
	Many more people have access to credit as provision has grown so fast in recent decades. There are important imperfections in the credit market and that is another reason to review the legislation. Choice and competition in the credit market and product innovation are all fine—no one would have a problem with that. They drive the market and make it so successful. However, with those things have come other consequences that Parliament needs to address. There is far more complication and a great deal of consumer confusion in this market, as well as opaqueness in terms of the consumer trying to understand what the product is or what will be the consequences of taking a particular form of credit.
	That creates confusion for the average customer—many of us would include ourselves in that category—but things become far worse for the vulnerable consumer and move on from confusion to potential entrapment in a downward spiral of debt, which can lead to tragic personal consequences, as we have seen in recent years. Reform of the law is needed to realign credit legislation with the real nature of today's credit market.
	Credit is very important to the economy, as it aids personal flexibility, helps us all in managing our personal finances and creates more opportunity than there would be without it, but we can improve the working of the credit market and support all its benefits while eradicating some of its excesses and bad practices, which we in the Treasury Committee have been studying and becoming increasingly concerned about.
	The new Bill, when we have it in front of us, must achieve a number of important balancing acts. Yes, we need a genuinely competitive market in consumer credit, but to have it we need informed consumers. Yes, we want fair competition to be promoted and encouraged, but that requires an end to misleading promotions. Yes, it is important to achieve transparency in trading in credit, but that requires an end to the obfuscation that distorts so much of the market. We must have fair trading in credit and between credit providers and credit consumers. That means an end to many of the practices that constitute irresponsible lending.
	To focus on an important issue, the market falls well short of being genuinely transparent. The credit terms that come with most credit cards are printed in minuscule type and written in the most opaque language that it is possible to envisage. It is very hard for the average consumer to understand—if they can even see them to read them—the terms of the contract that they have entered into.
	Also, it is impossible to compute the cost of credit. One thing that we on the Treasury Committee discovered in considering the issue is that an average consumer who takes two, three or four credit cards from different issuers, all with the same annual percentage rate, assumes that the cash cost of credit on those cards is the same. It is not. Hidden away in the small print are so many other variables that a person can do the same transaction over the same period on those four cards, all at the same APR, and the cash cost of the credit might vary by as much as 40 per cent. It is very difficult for consumers to keep up with all that. There are even different ways of calculating APR. That, too, adds to the lack of transparency.
	There is some progress in the industry—I hope that some of it is due to the work that we have done in the Treasury Committee—as it is moving towards a standardised APR, which I welcome. The industry is also introducing summary boxes, which summarise the key information on the credit, the offers and the statement. That is movement in the right direction, but it has been rather grudging and there is still a lot further for the industry to go.
	I see those as down-payments on the complete reform that is needed. The summary boxes are not yet standardised, so it is still difficult to compare providers. The penalty charges that attach to the cards are still not clear and they represent a large part of the spiralling cost incurred by those whose debt goes out of control.
	The point that we must try to reach when we reform the consumer credit legislation is that the full extent of the deal into which the consumer has entered must be on the table before the consumer signs up. The problem at the moment is that far too much is discovered after entering into the contract. That is the key change that we need to make if we are really to achieve proper transparency in the industry.
	I hope that the Bill gives us a chance to achieve fair trading in the industry. We have found far too many examples of where that does not exist. I want to stress one, and one only: the unsolicited issuing of credit card cheques. These are being sent repeatedly to 5 million households in Britain, all of them unsolicited. They come with glossy accompanying promotional literature. Many of the banks that issue those credit card cheques encourage people, as they send them, to spend them on holidays, cars, gifts for other people, or credit transfers to yet another credit card. There is always room, it seems, to print on the cheques themselves and the promotional literature all the things that they can be spent on, but there never seems to be room to print the APR, the actual credit cost, what will happen if one only makes minimum payments and so on. There can only be one justification from the industry's point of view—it is an inducement to the consumer to use up more and more of their credit limit.
	I have put the question to many providers of credit card cheques when they have appeared before our Committee: what is the justification for unsolicited issuing of credit card cheques? Answers come back along the following lines: credit card cheques provide convenience to consumers; they cover instances of payment when one cannot pay with a credit card or bank cheque; or they are helpful for balance transfers. All those are reasons for having credit card cheques as part of the credit business, but not one of them is a reason for the unsolicited issuing of credit card cheques. They are only delivered repeatedly, over and over again, because providers hope that they will land on the doormat on the same day as a glossy holiday brochure, and consumers will simply find it irresistible, put two and two together, and end up paying six for the privilege. It is simply an irresponsible extension of credit.
	There is quite a simple answer. The industry can make the argument for the existence of credit card cheques—I have no problem with that—but the consumer should opt in to them, not have to face repeated issuing of them, over and over again, when they are not requested and not used. In the White Paper, "Fair, Clear and Competitive", to which I referred earlier, it is suggested that the unsolicited issuing of credit card cheques "could" or "may" be one of the instances of irresponsible lending. I would suggest that it "is" an irresponsible form of lending. There is no justification for it, and I hope that we will use the opportunity of the forthcoming Bill to end the practice of the unsolicited issuing of credit card cheques.
	I also hope that when we consider the Bill in more detail, we can deal with the excessive interest rate problem in relation to store cards—credit cards issued by retailers. I can describe such interest rates as excessive, but it is not my description. When the Select Committee had the bosses of the four main banks in front of us, we asked them what they thought constituted an excessive rate of interest. The head of Barclays was unwilling to define it, but the others could—they put it in the region of 20 per cent. or more, against the backdrop of current base rates. Most of the interest rates charged by store cards are well in excess of that, so we can describe them as excessive—they are condemned as excessive by the industry itself, not just by consumer associations.
	There are 21 million store cards in circulation, £5 billion a year is spent on them, 14 million adults have them, but they all charge excessive interest rates. I hope that we will have an opportunity, in consideration of the Bill, to do something about that, and to act on conclusions already reached by the Office of Fair Trading, whose report stated:
	"the level of interest rates on store cards does not appear to be disciplined by competitive pressures."
	We must move to a genuinely competitive market, and if we do, we should see an end to excessive interest rates on store cards.
	I want to pick up on the observations made by the hon. Member for East Londonderry about charging automated teller machines. That issue will also be examined by the Committee, and it is another area in which it is important to review regulations on money and credit. There is an explosive growth of charging ATMs. There are 20,000 of them around the United Kingdom, and they grew by 40 per cent. last year. Of the 5,600 new cash machines installed across the UK last year, 63 per cent. were charging machines. We are nearing the point at which there will be more charging machines than free machines, because some banks are selling their networks to charging operators. This means that we are paying for our own money.
	The industry argues that it is all about convenience. It says that in remote areas, if there were no charging machine there would be no machine. That is not a convincing argument. Many charging machines are in areas that could not possibly be described as "convenience" locations. In Leicester square, for instance, there is a Travelex charging machine, which does not warn people that they will have to pay but tells them that they will have to do so only after they have completed five screen actions. On the other side of the square, there are free cash machines. That constitutes a total lack of transparency, and it is a further reason for my hope that the consumer credit Bill will deliver a transparent industry.
	There is an urgent need for Parliament to consider this issue. We need an opportunity to lend a hand to the millions of consumers in Britain who are wrestling with the complex, obscure and frequently misleading world of credit.

Richard Allan: I have a great deal of sympathy with what was said by the hon. Members for East Londonderry (Mr. Campbell) and for Warwick and Leamington (Mr. Plaskitt) about consumer protection in the context of financial services. However—unsurprisingly, perhaps—I want to talk about the role of information technology in the UK economy, a subject on which Cicero and Demosthenes did not regularly speak.
	For a number of reasons, IT is now centre stage in the political debate. It is no longer an issue out on the fringes for the anoraks to talk about; it is something that we all need to consider. The Chancellor emphasised its centrality when he told us that he had already factored into his public spending plans the Gershon review savings, many of which depend on the success or otherwise of IT projects.
	Government affects the sector as a whole because about half all IT spending in the UK is now made by the public sector. As Government spending plans depend increasingly on efficiency gains that themselves depend on IT, the expenditure is being ramped up. Sadly, the track record of Governments of all colours in procuring and implementing systems has been characterised by problems that we regularly examine on the Public Accounts Committee.
	Many of the mistakes that we see continue to be repeated, and this year's programme contains a huge amount of new IT risk. Both the identity card system and the Inland Revenue and Customs and Excise merger will be very IT-intensive. Major contracts from earlier years will also be of interest this year, notably the national health service's national IT programme, the large-scale outsourcing for the Department for Environment, Food and Rural Affairs, which has already been awarded, and the £4 billion infrastructure project for the Ministry of Defence, which is due to be awarded early in the new year.
	The record of problems that should form a background to our consideration has come to the fore in recent weeks with the failure to implement the Child Support Agency system effectively, and the desktop system crash at the Department for Work and Pensions, which was truly spectacular in technical terms. It takes real skill to bring down 60,000 work stations. Normally, servers are the problem; one machine is killed, and no one else can gain access. These people managed to kill 60,000 machines simultaneously, which deserves respect from a technical if not an operational point of view.
	Stories of IT failures have been well rehearsed both in Committees and here, and I would rather spend my time suggesting solutions that I believe would produce a credible Government IT strategy on which we could pin spending plans with a degree of expectation of actually being able to meet them. I characterise them as "people, practices and purposes". IT problems often lie not in the detail of the technology, but in the "people, practices and purposes" that surround it. Let us begin with "purposes", sometimes described as "requirements" or specifications. We should view it in a broader context, and start by asking what any system is for. Far too often we do not look at the context of what we are trying to achieve in the wider world, but simply mechanise existing systems.
	One example of our losing track of the wider world is the tax credit system. Like me, other Members doubtless get regular visits from constituents who complain that they have been overpaid tax credits and are now being asked to pay them back. The system works; it correctly calculates that such people have been overpaid, informs them—in a way that is completely unintelligible to me, and certainly to them—and then seeks to reclaim the money. In doing so, it loses track of the wider point that we are giving these people money in the first place because they are on low incomes, so our ability to reclaim it is bound to be limited. The purpose of delivering money to people on low incomes has been lost in the process of creating a system that works well at a technical level—it does not lose the Treasury's money—but which does not deliver what the customer actually needs.

Richard Allan: I have had precisely the same experience; people have come to my surgery to point out that they have been given exactly the same advice. Such incidents show that, in the broader context, the system is not working, irrespective of whether the technology is doing what it supposed to do. These are the issues that we need to debate. Another example is the huge electronic medical records programme that the national health service is introducing.

Richard Allan: In the case of ID cards, we know that the scheme has been through the first gateway, as the general feasibility has been looked at. One of the problems that the House will face is that, after public money has been spent and the best Treasury brains in the Office of Government Commerce have been applied to the project, we will not be able to see the outcome. We will have to debate ID cards in the knowledge that a report into feasibility has been drawn up, but is unavailable to us. I know that the hon. Member for South Norfolk (Mr. Bacon) is working on the task of gaining access to the gateway reviews. After all, we are taking decisions about spending public money, so the information should be made available to us.
	Gateway reviews are one of the practices that should be followed. Many have been dealt with in National Audit Office and Public Accounts Committee reports and, to be fair to the Government, there are some signs of hope in the work of the Office of Government Commerce and, indeed, of some Departments in proving their game. I believe that we should compliment Departments when they start to get things right, but there are still clouds on the horizon, especially in the apparent lack of competition in the market, which leads to companies that have failed in one area still picking up lucrative contracts from other Departments.
	It is an easy target, but Electronic Data Systems is often singled out for its problems with tax credit systems, Child Support Agency systems and high-profile incidents such as what happened last week at the Department for Work and Pensions, a story that writes itself. Yet EDS remains a major partner and one of only two consortiums remaining for the £4 billion defence information infrastructure project that will be awarded next year. Understandably, people ask how we can end up with failure being rewarded by the award of another contract.
	Only in very few cases have contractors been written out altogether; Accenture, in its old guise of Andersen, was prevented from bidding for Government contracts for a while after a national insurance record system cock-up. Generally, we see the same faces coming back. The problem is not with individual companies. The problem is systemic, because contracts are geared in such a way that smaller innovative companies simply cannot get in. They can find no way in and tell us daily of their difficulties in obtaining Government work. The contracts, tender documents and costs of bidding prevent those companies from bidding for that work, even though they could demonstrate better value for money.

Richard Allan: The hon. Gentleman makes an interesting point. We have already, quite rightly, done away with the private finance initiative for IT projects, but the level of in-house expertise, which I am coming on to now, is critical to getting these sort of projects right. We have, sadly, developed a culture of tolerating failure in software development, which is simply not necessary. There are voices calling for proper software engineering principles to be applied, as mentioned in a very good report produced by the Royal Academy of Engineering and the British Computer Society. We should listen to what is being said. Correctly engineered software does not have to cost more than buggy software, yet there is a sort of lazy assumption out there that these things simply have to go wrong. That is not true. The engineering principles are there; the problem is that they are not being applied.
	Improvements to Government performance could be made by instilling these disciplines in departmental IT centres of excellence. If we are to have IT centres of excellence, let us ensure that they are truly excellent and that they do not adopt some of the lazy practices offered by suppliers over the years. They must secure best practice rather than state of the art. State of the art is terrible; they need something better than that. We should use information architects, which is an important recommendation in the Royal Academy of Engineering report, and we should have requirement specialists to get the designs right from the beginning. We need to ensure that a broader range of companies is able to bid into the public sector market.
	The most important, and often the most neglected, element of any IT project is the people. Industry—British Gas, BT and others—has learnt to look at such projects as business change projects, rather than as technology projects. They are not about technology but about changing the business, with technology as a large element of that change. An example of how far the public sector is from that attitude is the national programme for NHS IT. The technology procurement appears robust—I am sure that Richard Granger's team will have bought some good technology—but the people have been left so far behind that the technical press, and even the more general press, are full of stories of clinicians in the NHS who are fighting the very programme that is supposed to assist them in their work. The project is getting the people side desperately wrong. If anything brings down the programme and leads to significant wastage of the £6 billion committed to it, it is likely to be on the people side, not the technology side.
	We must ensure that the NHS now gives priority to working with its staff to implement the new IT systems and puts money into training. The NHS must ensure that it has in-house expertise so that people can use the systems and derive maximum benefit, rather than leaving the matter to the external contractors.
	The Government can improve their IT procurement, to the benefit of the public purse and, most importantly, the users of the services, if the will is there. The Government can do more to create a climate in which the UK IT sector can flourish to the benefit of the economy as a whole; the pointers to what needs doing are already there. Ofcom should be robust in promoting a competitive telecoms market and can expect a lively year ahead as it grapples with some of the more difficult issues of telecoms competition that have been left to ride over several years. The Government can respond urgently to the e-skills UK report, "IT Insights", which highlights the improvements needed in work force training. Other hon. Members have mentioned our competitiveness with China and India, but the report tells us what problems we will have if we do not address the issue of skills, all the way up to chief executive and ministerial level. We need IT skills across the work force if we are to be able to make correct and informed decisions.
	We need to ensure that we continue to review our support for research and development in technology to ensure that it is genuinely additional and efficiently delivered, without the complexity that often makes it inaccessible to the very companies that would most benefit from it. Such companies often say that they cannot make their way through the bureaucracy to access the funds that are supposed to be available to support innovation, or that they have to employ an extra layer of specialists to do so for them.
	I am not in the camp of those Jeremiahs who wish to see the Government fail in their objectives. That is especially so in the case of the improvement of public services through new technology. Indeed, I am desperately keen that the Government should succeed in that agenda. It is not in anyone's interests that such projects should continue to fail. It is a high-risk agenda, but not an impossible one. I hope that the Government will continue to learn the lessons. The Liberal Democrats believe that our approach to the issue is credible. We could achieve savings through the use of new technology, but it is incumbent on all parties who put forward a cost-saving agenda for the public sector to demonstrate that they have the credibility, have learnt the lessons and will deliver.

Harry Cohen: I shall not follow the hon. Member for Sheffield, Hallam (Mr. Allan) on the subject of IT in public services, although he made some good points about greater competition for such contracts. The Government have to be clear about what they want from such contracts and there should be penalties for failure as well as rich rewards.
	I welcome the programme of new legislation for next year that was announced in the Queen's Speech, including the 37 Bills—some complex and important—the Chancellor's financial proposals in his pre-Budget report tomorrow, and the commitments in Labour's election manifesto, when it is published. The one thing that cannot be said about this Government is that they have run out of steam. They have plenty of ideas for improving society and the lives of our people.
	I want to address one issue that the Government will have to address more fully in the next year; pension reform. I shall indicate some components of such reform that I think would achieve the most favourable outcome for the many, not just the few.
	First, I shall give the House two recent examples that show pension schemes in a mess. On 19 November, under the headline, "APW staff furious as loophole threatens pensions", The Independent reported:
	"More than 1,000 former and current workers at APW—the UK electronics manufacturer, which announced the winding-up of its pension scheme yesterday—are set to lose up to 80 per cent. of their retirement savings . . . The wind-up is the second such case this week, after Henlys, the bus group, left more than 2,000 workers in jeopardy when it announced that it would be winding up its pension scheme . . . Despite a fortnight of debate over the final structure of the privately funded Pensions Protection Fund and the Government-backed Financial Assistance Scheme, members of the APW and Henlys schemes are still set to fall outside the requirements to qualify for either lifeboat."
	That is appalling, although I pay tribute to the Government for bringing in the pension protection fund and the financial assistance scheme.
	Another report in the same paper on the same day was headed, "Royal Mail warns it must double pension contributions", and disclosed a scandal that is repeated in many other companies. The report stated that
	"for the previous 13 years, Royal Mail had taken a pension holiday, making no contributions at all."
	That companies and employers can do that is an enormous flaw in the current system, especially as the report went on to note:
	"However, the organisation's top management . . . stand to collect millions of pounds in performance bonuses."
	Some people get their bonuses by not putting money into pension funds.
	Those are not isolated scandals; they are a flaw in the system, and not least in the Chancellor's approach of maintaining that his responsibility is the prudent management of public finances, which is laudable, while leaving the private sector largely to operate as it wants. Companies hold in trust, but are untrustworthy with, people's savings and workers' pensions.
	On pensions, the Chancellor has said:
	"If the voluntary sector"
	—he meant the private sector—
	"doesn't work, we'll have to look beyond that."
	The examples I gave are among the many that show that the system does not work and that it is time for the Government to look beyond it.
	The Tories attacked the Chancellor for abolishing the tax dividend on pension funds. I refer to the "Daily Politics" Tory conference special on 6 October, when the presenter, Andrew Neil, questioned the hon. Member for Havant (Mr. Willetts), the Conservative spokesman on work and pensions. The hon. Gentleman had said in his speech to the conference that Labour's £5 billion per annum take from pension funds, by completing the abolition of the tax dividend—by the way, that process started under the Tories—was
	"the worst stealth tax of the lot".
	Andrew Neil asked him whether he would restore the money and the hon. Gentleman replied:
	"We're not in a position to make that pledge. We're not making that pledge."
	Mr. Neil concluded:
	"All right, so the £5 billion in tax stays."
	The Tory attack is thus somewhat feeble.
	The Chancellor is not out of the woods as far as I am concerned, however. On the "Today" programme on 27 September, he said that the £5 billion per annum taken out of pension funds was connected to rewarding investment; to give greater incentive for investment in the economy. He said that corporation tax had been cut by 3p and
	"the result is that companies should be more profitable after taxes".
	That was not picked up at the time, as it was Labour's conference week and news moves fast, but in effect the Chancellor said that he had taken out of workers' pensions to put into company profits. That is not appropriate from a Labour Chancellor and he will have to arrange to put back that money, and a lot more, over the next period.
	I believe that there has to be dignity and well-being now for today's pensioners, and I praise the Government on their efforts on that. They were right to tackle the appalling legacy of pensioner poverty that they inherited from the last Tory Government. In 1997, 2.7 million pensioners were in poverty and expected to live on a total of just £69 a week. The poorest pensioners are now £1,800 a year better off and absolute pensioner poverty has been reduced by two thirds.
	Savings used to be harshly penalised by a reduction in benefits. The new pension credit has changed that. The setting up of the pension protection board, to help the workers in those firms that go broke and wind up their pension fund, is also a very welcome move by the Government. But there need to be decent pensions for people in the future, and to achieve that reform is needed.
	The recent interim report of the Pension Commission, chaired by Adair Turner, formerly of the CBI, said that a sustainable comprehensive approach was required for the long term. There are, it argued, four "unavoidable choices" for policy makers, at least one of which will have to be made. The first is that pensioners become poorer relative to the rest of society. The second is that taxes and/or national insurance contributions devoted to pensions will need to rise, or public spending on other services will need to be reduced, presumably to balance tax and national insurance. The third is that each generation will have to save more and be reliant on the next generation also saving more. The fourth is that retirement ages will have to rise. Without action on this, the report said,
	"pensioners will on average suffer about a 30% decline in their incomes relative to average income between now and 2035."
	So doing nothing is not an option and the Government will have to start to address the issue in a realistic way from next year.
	I oppose raising the retirement age; I also favour a bigger basic state pension for every older person in this country. I would like the pension linked to earnings and to be free from means-testing. The Government's minimum income guarantee raised the incomes of the poorest among the elderly, but I have seen figures showing that the basic state pension is now just 15 per cent. of average earnings. In 1980, before Mrs. Thatcher abolished its link to earnings, it was 23 per cent., so in my view the Government have to raise the basic state pension.
	I favour a compulsory savings requirement upon all people to individual savings accounts, which cannot be accessed until retirement or, for a spouse, death. There should also be compulsion for employers to contribute at a proper level, higher than now. They should also lose the power to manage and, potentially, to raid their workers' pension fund. The Exchequer should insert an initial sum, like that proposed with the child bond—which I very much favour, although the Liberals opposed it—into the individual savings accounts, and add a state contribution to extra private savings made, say a pound for every pound saved.
	There should also be an extra boost from the Exchequer for women's pensions. Many women lose out on their occupational pension because they undertake important but lower paid jobs and miss out for a long while in their working career due to the time that they take out to raise their children.
	I am not against Exchequer use of the private sector. It could use the private sector to manage the savings account sum in total, but the managers' performances would need to be monitored and their contract terminated if their performance was inadequate.
	The Government would also need to address the impact of stock market fluctuations upon savings for retirement, perhaps by adopting a system whereby they inserted extra cash during bad times and took it back at times of stock market rises. It should be possible to do that consistently in this day and age.
	Effective robbery from pension savings by fat cat directors of finance companies who take excessive salaries and dividends for themselves, even when the savings that they are managing are underperforming, must be stopped. It is also time that the salaries, dividends and other payments that directors receive from companies, including their pensions, are published in annual accounts and not kept secret, as is often the case. I introduced a Bill to require that in the last Session and I hope that the Government will take up that point.
	Those are my basic components for pension reform, which I hope will be taken on board. Over the next year, I hope that the Government will be for the workers, not the bosses, and for the many, not the few.

Geoffrey Clifton-Brown: The Gracious Speech contains a massive number of Bills—32 in all. Thank goodness most of them will not see the light of day before the next general election.
	I cannot sum up the Queen's Speech any better than Anatole Kaletsky, who said that it is a rag-bag of unfortunate measures. It is one of the most illiberal Queen's Speeches for a long time. On identity cards, I walked past eight policemen this morning. That is the most I have seen in many towns in my constituency in the 12 years that I have been a Member of Parliament. Each one could have stopped me and asked for my identity card. Had they done so, I would have been late to make my speech. That shows what an ID card could do to the relationship between this country's citizens and the police.
	The Queen's Speech is set against a world environment in which two particularly important things have happened. One is the general situation in the middle east, which has severe consequences. It has led not only to a huge oil price spike but to a significant cost, both here and in the USA, of keeping our troops in Iraq. That, of course, has led to the special provision by the Chancellor. The second is the substantial decline of the dollar, which has now reached a rate of almost 50p. That is because other world uncertainties have led commentators and others to concentrate on the very large twin deficits in the States and here.
	The Chancellor has had an extremely lucky tenure since he has been at No. 11 because of the stable world environment. From what I said, it is clear that I believe that that might, sadly, become less stable. That will give him even greater problems in meeting his fiscal and monetary targets. In tribute to him, but in concert with many other central banks around the world, central banks have become much better at managing the macro-economy, injecting liquidity into an economy when it is needed, but also engaging in monetary tightening when economies are starting to overheat. That has led to a much more stable economic cycle.

Paul Farrelly: How does the hon. Gentleman explain the fact that the ratio of what used to be called the Government deficit to the national debt now stands at 32.7 per cent., compared with the 43.6 per cent. ratio that Labour took over in 1997?

Angela Eagle: It is a pleasure to follow the hon. Member for Cotswold (Mr. Clifton-Brown), who is clearly drawing up battle lines for the election. I merely point him to the latest polls showing how people may vote in any election in the coming year.
	The themes of the Queen's Speech were clearly security and opportunity for all in a changing world. Before talking about opportunity, I congratulate the Chancellor on his economic record and the achievement of economic stability, which underpins all our subsequent policies as a Government and gives us the chance at long last to invest in and reform our sorely neglected public services, ensuring that we can create a fairer society with opportunity for many people who were left behind in the years of Conservative government. That economic stability has been achieved through political choices about, for example, the independence of the Bank of England and monetary policy, as well as a system of fiscal rules that have enabled us to steer a steady course through internationally choppy waters.
	Whatever the Opposition's motivation in attempting to paint a different picture, the economic facts are unchallengeable and need to be put on the record. We have had growth in every quarter for the past seven years, thus achieving the longest period of continuous growth for 200 years. We have had the longest period of low inflation and interest rates since the 1960s, and while the Government have been in office 2 million more jobs have been created. Unemployment is at its lowest for 29 years. In my constituency, there has been a 57 per cent. fall in unemployment, and youth unemployment has been wiped out. Those are the lowest ever figures for my constituency, and I will be proud to campaign on them when the time comes.
	Economic stability and growth have enabled sustained public sector investment in our schools and hospitals, child care, skills and the knowledge economy. For example, in Wirral borough, before a Labour Government were elected, capital investment in schools ranged from £1.5 million to £2 million a year. That has steadily risen to £18 million a year, and we have a transformed infrastructure in which our children can learn. In addition, there is a £55 million private finance initiative project which will deliver seven new schools.
	Many people would have thought that such a changed environment for my constituents was impossible when the Government came to power in 1997. It contrasts with our experience of 3 million unemployed, 1.5 million households in negative equity and constant cuts in public services, which was the Tory record. We have heard today of the £35 billion of cuts that are the Tory threat and their platform for the next election.
	I welcome many Bills in the Queen's Speech. I shall speak briefly about the consumer credit Bill. My hon. Friend the Member for Warwick and Leamington (Mr. Plaskitt) made an extremely good speech dealing with the details of the problem that must be confronted in the Bill, including the introduction of summary boxes to deal with confusing interest rates; misleading advertising; and the proliferation of complex products with opaque and confusing prices, sometimes with extremely high rates of interest, which are not clear, and even higher rates of penalty charges, which can often drag modest borrowers into serious trouble. We have all had examples of that in our constituencies.

Angela Eagle: I am slightly more patient that my hon. Friend and am happy to see the Government getting on with it. On age discrimination, many knotty and thorny issues must be worked through, and the exemption until 2006 was implemented for a specific and good reason. However, I would like to see the work being done as quickly as possible as that date approaches.
	I particularly welcome the positive duty to promote equality on gender grounds in the equality Bill, because I had a ten-minute Bill on that subject not long ago. Although I am sure that the Government have been listening to me, I suspect that the process went on behind the scenes for quite a while.
	The Government have delivered on their commitment, which was made in 1999, and the legislation will help to shift the structure of our battles against discrimination in our society on to a preventive footing. The older legislation protects people and gives them compensation after they have been discriminated against. The new positive duties will prevent discrimination from happening in the first place and will enable us to create a culture—initially in the public sector, and in due course in the private sector—of prevention, which will enable employees to know that they have rights, and employers to know that they have responsibilities to ensure that unthinking and illegal discrimination does not happen. I welcome that move.
	I welcome the equality Bill's extension to goods and services of protection on the grounds of religious belief. I should like that to include sexual orientation and age, which are the only two strands of employment protection that have not had goods and services protection extended to them. This important Bill will change the equality delivery infrastructure.
	The UK's existing anti-discrimination legislation needs to be updated, as it is inconsistent, piecemeal and complex. Since the enactment of the first such legislation by Harold Wilson's Labour Government—the formidable and fantastic Barbara Castle piloted it through this House more than 25 years ago—it has developed into a package of 30 Acts, 38 statutory instruments, 11 codes of practice and 12 EC directives and recommendations. I am not surprised that even those employers who wish to do right find the increasingly complex and sometimes inconsistent regulations facing them to be a bit much. It is about time that we had a Bill to simplify, harmonise, consolidate and extend our legislation to make it much easier for employers and employees to comprehend.
	Unless that is done, the Government's plan to combine the three different commissions, welcome as it is, will be flawed. It is important that employers who wish to do right know exactly what is expected of them and that employees who are subject to unlawful discrimination realise that they have been discriminated against and know that they can have redress. It is even more important that employers and employees can work together to eliminate from the labour market and from the provision of goods or services any unlawful discrimination on the grounds of gender, race, religious belief, disability and, I hope very soon, sexual orientation and age. Then, as our economy develops in the choppy waters that our Chancellor has managed to navigate so well, we can make certain that opportunities that have not been available in practice in the past are opened up to all our citizens regardless of their gender, race, creed, colour, disability, age or sexual orientation.
	Extending and consolidating that approach will make our economy more efficient and enable us to use the undoubted skills and talents of our citizens, many of which are grossly underused, much more effectively. That will put us in a position to continue to make our way in the world and to enjoy the ever rising standards of living that we have experienced. It will also, crucially, help us to fight inequality, poverty and disadvantage, which we still find in all too many parts of our communities where discrimination has been suffered.
	With the Bills in this Queen's Speech, the continuing work to ensure that we preserve our economic stability, and the equality Bill to consolidate anti-discrimination legislation, we truly look forward to a much fairer and more progressive future.

Peter Atkinson: Crisis? What crisis? In fairness, the Secretary of State is talking about something slightly different. I am talking in particular about those with company pensions and private provision pensions. They are the ones who have been putting their money in bricks and mortar and in commercial property to safeguard their future. They are the people who are hit by the Chancellor's ridiculous decision to cut the amount that can be put tax free into individual savings accounts and other investments.
	I accept what the Secretary of State says—in the long term, of course there is a problem down the line for the basic state pension—but that is a different problem from the immediate crisis that this Chancellor has caused for those with private sector pensions. It is a shame that he had nothing to say about that. The one word that we did not hear, as my hon. Friend the Member for Cotswold (Mr. Clifton-Brown) pointed out, is the magic word—prudence. Sadly, prudence is now dead and buried.
	I want to make one or two other points about the problems facing business and to deal with the point made by the hon. Member for Wallasey about the welter of legislation, such as all the European directives. I agree that such measures must be simplified, but it is important to realise their impact on growing and smaller businesses.
	I represent a constituency in the north-east of England, which, as everyone knows, had a large number of old, declining industries such as coal, steel, chemicals and shipbuilding, which have long since been laid to rest. We needed to replace those, which we did with a large number of important high-tech inward investors. Some of them, such as the Nissan car company, have been tremendously successful, but others have been what might be described as false friends. They came here and made a contribution, but when economic circumstances changed they moved from the north-east to lower-cost economies. The lesson we have learned is that while they helped with the transition from the old heavy industries to a new type of economy, they are beginning to disappear.
	Regions such as the north-east must now rely on home-grown industries. We in the north-east have been very successful in doing so and, to name a few, we now have companies such as Sage; Greggs of Gosforth, which was a little baker's shop but is now a national chain; the Go-Ahead group; and Reg Vardy in motor distribution. Those are great success stories, but we need many more. We will achieve that by building up our new smaller businesses, but regulation can damage them so much.
	Regulations on discrimination, paternity leave and maternity leave are well intentioned, but for a small business employing three or four people they become a considerable burden in both time and expense. Letters and representations from local businesses in my constituency, which are mostly small businesses, show that such regulations are becoming a heavy burden that restrict their development. That fact must be taken on board when such matters are discussed.

Sally Keeble: As the hon. Gentleman may have noticed, I am not a particularly tribal politician. Small businesses usually consist of people who are simply earning an income for their families, and for that reason many banks have virtually turned their small business financial services into personal financial services. I recognise that those who run such businesses do not like filling in forms. Of course we want to see a reduction in regulation, and I understand people's complaints in that regard. Nevertheless, if we want to expand the economy, we come back to the major issue of skills shortages.
	We should remember that this Government have made available the finance to expand small businesses. The investment in early years has been key to the economic well-being of families, particularly because it has enabled women to go out to work. One of the last things that my right hon. Friend the Secretary of State for Work and Pensions did before getting his current job was to visit University college Northampton, a higher education college in my constituency that will shortly get university status. The expansion of university places, and what that says about our attitude to skills, has been extremely important to the economy.
	I want to highlight some of the wallet-to-purse measures that, although I previously identified such criticism with the Liberal Democrats, both Opposition parties have criticised—such as the new deal for lone parents, the pension credit and investment in child care, particularly the children's trust fund. The new deal for lone parents has been transformative, in that it has enabled some of the most excluded of unemployed people to return to work. It has allowed some of the women to whom I have spoken to get work, to provide a role model for their children, and eventually to buy their own homes. Similar things can be said of the investment in child care.
	The pension credit has its shortcomings, but anyone who tried to persuade a female pensioner—a lot of the recipients are indeed women—that they would be better off without their £5, £10 or £20 a week would receive a blunt suggestion about what to do with their argument. As we approach the election, it will be interesting to discover what such people have to say once it becomes clear that not only are the Conservatives taking a hostile attitude to many of the measures that provide equality for women—we are well used to their doing that—but the Liberal Democrats are doing the same.
	I want to move on to a couple of the measures in the Queen's Speech. There is a child benefit Bill, which will provide for an extension of the education maintenance allowance. I suspect that it will be one of those measures, little heralded and little talked about in this place, that will produce lasting benefits for many people. Support is already provided for more than 1,000 people in Northamptonshire, and the feedback that I receive from single parents who are struggling to ensure that their older children stay on at school rather than go out to work has been very positive. I am rather surprised that we have heard no comments about that from either the Liberal Democrats or the Conservatives. I quite understand that people may be waiting for Second Reading, but the fact remains that this provision has been piloted and is already out there, so I would have expected to hear some comments from the other two parties on the theory or practice of that support. The legislation will reach a particular section of the community and bring real benefits to my constituents. Not everyone among my constituents aspires to go to university—more's the pity, in some ways.

Sally Keeble: I am grateful to the hon. Gentleman for clarifying that point, and I wish that the Liberal Democrats would clarify their position, which their spokesperson today did not do.
	Some of my colleagues have mentioned the consumer protection Bill, which will provide important safeguards for my constituents. People in Northampton carry high levels of credit. We all know that Christmas is coming, and this morning I was told by the housing and money advice centre, which provides an excellent service for my constituents, that on average, people will spend about £800 in presents, about half of which is likely to be on credit. Consumer debt and the need for safeguards are important matters at this time. I welcome the fact that the Bill will make provision for much needed better regulation and raise the present £25,000 limit. On the subject of local debt, about half the people who had severe problems, with debts of about £9,000 or more, were not in work. In an area with relatively high levels of employment, that is quite surprising. One sure way to deal with debt problems is to deal with the problems of poverty and unemployment, and the Government are committed to doing so.
	I greatly welcome the measures in the Queen's Speech, although there is always room for more to be done—not just in extra measures, but in speeding up those already in place. The ending of child poverty was mentioned earlier. I would greatly welcome that, as I would the speeding up of the extra safeguards for children, particularly in connection with housing. I am reminded that last Friday night I visited a constituent who lived with her five children in a single room in the basement of a bed-and-breakfast hostel, placed there by a Labour council—no, it was not a Labour council but a Conservative one. That was a Freudian slip. It used to be Labour, but is now Conservative and standards have deteriorated. For a woman with five children to live in a basement flat is not appropriate in 21st century Britain, and she was but one of three women who came to my advice surgery with that problem. I hope that we can speed up some of those measures.
	I would also like to see improvements to pensions, as several of my hon. Friends have said. I know that my right hon. Friend the Secretary of State for Work and Pensions is very aware of the issues around women's pensions and the problems that women face as long as basic state pensions are closely linked to national insurance contributions. The issue of first-time buyers is also important.
	The main thing that will safeguard the interests of my constituents is having a Labour Government, and the main threats to their interests are the two main Opposition parties. As always happens in debates on the economy, people focus on the big picture and the macro-economy, but for many of our constituents the little picture is the big picture. The £5, £10 or £20 in pension credit is what makes a big difference to their lives. Being able to get their children into nursery schools and the investment in the child trust fund will also transform the lives of my constituents. The education maintenance allowance, too, will help single parents who are struggling to ensure that their children stay on in school and get the qualifications that they need in an expanding economy.
	I very much welcome the measures in the Gracious Speech and I look forward in particular to the two Bills that I have mentioned becoming law well before the magic date of 1 May next year. When that day comes, my constituents will have had their letters about the child trust fund, which the Conservatives think that they should not have, some of them will be receiving the education maintenance allowance, and they will all continue to see the benefits of having a Labour Government.

Paul Farrelly: I shall come on to the beneficial inheritance of oil, especially for the Conservative Government. To set the record straight, under Labour, from 1976 until the 1979 general election, unemployment fell. It continued to fall until just a few months into the Tory Government, from which point it rose, rose and rose again.
	My right hon. Friend the Chancellor is fond of quoting the 15 per cent. level to which interest rates shot up during the second recession that the Tories unleashed on this country much later, in the 1990s. Today, as we know, rates are still below 5 per cent. Then, however, there was a worse bogey figure with which to scare the wee bairn: during the first savage downturn under Thatcher, rates reached 17 per cent. Sterling soared and yet more industry fell. By the time the monetarist experiment was killed off, quietly, during the Falklands war, one in six families in my area—north Staffordshire—had been hit by redundancy. There was no respite, however. Far from it. In 1985, the biggest mine in my area, Wolstanton—our super-pit, which we visited when I was at school there and which had the deepest shafts in western Europe—closed for good.
	Let us compare that legacy with the current record. We have never had lower unemployment; we have never had more employment and regeneration. The unemployment figure for the whole country is 836,000—nearly half the total in 1997, when it was 1.6 million. Since 1997, the figure has fallen steadily. Under the Tories, when the Wolstanton pit closed, unemployment broke through the 3 million barrier for the first, but far from the last, time.
	Early on, the Tories' record made a mockery of their infamous slogan, "Labour isn't working". Our record shows that people are working, businesses are working and Britain is working. Labour certainly is working.
	As we heard earlier in the debate, we are educating and training, too, and what a record of Conservative failure we are trying to reverse on that score. Before the Tories got into power all those years ago, skills in the pottery industry in my area were supervised by the ceramics training board and pay negotiations were industry-wide, but under the Tories there was no such thing as society. They swept all that away and it was every man for himself.
	Members may not believe this, but at the Michelin factory in Stoke-on-Trent all those years ago, apprentices were given free milk, lunch tokens and sun-lamp sessions to keep them healthy. Remember what the Tories did to apprenticeships—they disappeared. I am not asking for the return of the sun-bed sessions—[Hon. Members: "Oh, go on."] Some Front-Benchers already benefit from them.
	Over the past seven years, my right hon. Friend the Chancellor has been doing his level best to reverse that legacy of neglect in education, skills and training. When I made my maiden speech, I called for the pilot schemes for the education maintenance allowance to be extended to my town and nationwide. They have been extended. In Stoke-on-Trent, next-door to my constituency, the EMA has already led to more children from poorer backgrounds staying in education and training after the age of 16. In my constituency, our version—the Newcastle achievement scheme—is having similar positive effects that everyone can measure. Conservative cuts would, of course, sweep all those opportunities away.
	In my area, the Ceramic Resource Centre, a partnership between the Ceramic and Allied Trades Union—the potteries trade union—the DTI and our regional development agency, is helping workers to retrain and find new jobs. It also helps to preserve valuable industrial skills that would otherwise be lost. Tory and—I am sorry to say—Liberal Democrat cuts would sweep that away, too.
	In Newcastle, the new deal has helped nearly 2,000 people into work. Of those, more than 1,200 have permanent jobs as a result. As we have already heard, the Tories and the Lib Dems would scrap the new deal. The Chancellor has done all that while presiding over the longest sustained period of economic growth for two centuries. There has been no savage boom and bust, unlike the early '80s, the late '80s and the early '90s under the Tories and yet, despite that, and despite their record, they have the nerve to cast aspersions on our competence, on the Chancellor's prudence and on his golden rule. Conveniently their memories fail them again.
	Today, we should remember that we are not living in what should have been the heydays of the '80s and '90s, when the Government enjoyed a twin set of riches—booming tax receipts from North sea oil and untold billions from privatisation. Labour did not enjoy them in the 1970s either, when the country, like the international economy, was suffering oil shocks and when we were investing for the future in the North sea. Now, of course, we are having to prepare for a post-oil and gas economy too. But what did the Tories do with their one-off riches? Did they invest in education and skills? Did they invest in public services and the country's infrastructure? No. They blew it and threw it away.
	I remember well—I was working for The Observer at the time—all the gloomy faces on the Tory Benches when the Government announced that they had raised £22.5 billion from the sale of the third generation of mobile telephone licences. That was worth three privatised BPs, five British Gases, two whole British Telecoms—worth as much, indeed, as was raised from the sale of the electricity, gas and water industries all put together under the Thatcher and Major Governments. And of course, unlike their sell-offs, it was not a botched sale below value. Great care was taken. Bidders went through a carefully crafted auction of 150 rounds. My right hon. and hon. Friends immersed themselves in the intricacies of game theory.
	Now compare that care, competence and prudence with what went on before. I remember the privatisation of the National Bus Company in 1986. I remember it very well because I was working in the City at the time, with Barclays De Zoete Wedd, the bank charged with its sale. [Interruption.] I am not afraid to admit it. No sooner had Nicholas Ridley chopped the buses up into 90-odd pieces than the patchwork quilt was zipping itself up again as the first companies privatised started buying the rest, as we warned the Government that they would.
	The Conservative Government ignored our advice too on insisting on clawbacks of the profit on the future sale of companies, which was standard procedure in the private sector. They ignored it, and what happened? Ten years later, they were at it again, breaking up British Rail, wrecking an industry, selling state assets at a discount to profiteers. They did not listen and they did not learn because they did not care. And here is the nub. How did they treat the money? Did they, like the Chancellor, treat it as a one-off to pay off debt, as any prudent household—in Grantham, for example—might be expected to do? No. Conservative Governments treated it as negative public expenditure. No wonder then, when the silver ran out, that the public finances were in such a mess. The Chancellor need take no lessons in competence and no lecturing from the Tories on his golden rule or his golden record.
	I think that it was the last Chancellor but one, Mr. Norman Lamont, who said, quite callously, that high unemployment was a price worth paying for low inflation. Now we have record low inflation and record low unemployment. Of course, Lord Lamont's repertoire also includes the infamous, "Je ne regret rien", which he sang in his bath both before and after the pound was unceremoniously dumped out of the exchange rate mechanism. I gathered with others around the Reuters screen when I was working for Reuters, just as the Chancellor and the Prime Minister gathered around the Reuters screen at No. 10, and I remember that, when the interest rates had gone from 10 to 15 per cent., that was not the limit of it because overnight money rates trying to keep money in this country were reaching 70 per cent.—a far bigger bogey figure.

Jim Cunningham: I did not know I was so popular.
	It has been an enlightening afternoon listening to the Opposition. They said the Chancellor was ranting. I thought he said one or two interesting things. Very little has been said about how he has led the way on third world debt, which has been acknowledged internationally. He also touched on the new vaccine that will help people to combat AIDS in the third world. It was not all a rant; his speech contained some positive things. On the other hand, the shadow Chancellor never gave us any alternative. He said that we would all know what was going to happen a couple of months down the road. That was enlightening. So if anybody ranted, it was the shadow Chancellor.
	The Liberal Democrats raised the issue of tax credits in terms of research and development. I do not know whether they know this, but research and development is a hefty cost in any industry. When that is linked to companies, and taking into consideration the input from universities—many of which are funded by research and development money—it is clear how vital it is to British industry. If we do not put money into research and development, we will lose out in trade, exports and balance of payments and we will have problems.
	The other thing that surprised me was that the Liberal Democrats did not offer a replacement. It is not good enough to say that the money will be taken anyway because it will be on offer. In fact, I and a number of others used to go with the trade union movement to lobby the Department of Trade and Industry under the Conservative Government to get money pumped into research and development. Anyone could see that if we did not do that, the country would run into serious problems. As time has proved, the current Government are having to put money into not only research and development, but technology education to teach people how to use that technology.
	When I am talking about industry, it would be remiss of me not to mention the useful demonstration in Coventry on Saturday to show the feeling on Ford's arbitrary decision to close the Browns Lane plant. Ford entered into an agreement in 1998 that if the work force increased its productivity and quality, further investment would follow for new models to be built at that plant. It was used as an example up and down the country, certainly in Ford plants, as the road the labour force should go down to secure their future. What did they get in return? A slap in the face, because the factory is closing.
	In debates on the economy, successive Governments have exhorted the labour force to increase quality and productivity. The Government encourage it, the workers do it and there are relevant orders, but the plant gets closed. What signal does that send out to the labour force up and down the country? We know that we have to be competitive. We have to improve quality, technology and other things. I could not let that closure go without mentioning it. The year before, it was Massey Ferguson in Coventry. Under the previous Administration, it was the Standard motor car company.
	My hon. Friend the Member for Ochil (Mr. O'Neill), the Chairman of the Trade and Industry Committee, mentioned Peugeot, which has a grant to use on development. We are waiting to see how that money will be used. We Members of the Parliament and the Government have to keep an eye on the companies. We must not forget that Ford got about £85 million in Government grants. It has been suggested that it would probably be cheaper to keep the Browns Lane plant open than to close it, but we have all heard that sort of suggestion. The company has given us all sorts of assurances about the Whitley plant, but if it has broken the assurances it gave us four or five years ago, why should we believe the company now? Ford tells us that it has exciting plans, but why should we believe the company when it has broken an agreement?
	Like my hon. Friend the Member for Newcastle-under-Lyme (Paul Farrelly), I remember when we joined the ERM and the consequences of doing so. I remember when interest rates went through the roof and when they changed three times in one day; that did not stabilise the money markets, did it? The Conservatives say that we will have to borrow as a result of the Chancellor's Budgets, but they forget that they borrowed £50 billion. Of every pound paid in interest, 50p came from the taxpayers' pocket. We should not let the Opposition get away with some of the things that they have said today.
	Opposition Members have talked about old-age pensioners, but I remember coming down on a Friday morning trying to get winter chill payments passed. When the Conservatives were in Government, they blocked the measure time and again. I also remember the Conservatives increasing VAT on fuel; was that going to help pensioners? It was the Labour Government who reduced it. We have long memories. We know what the Conservatives are capable of doing in government and no matter how they try to dress it up, their past will come back to haunt them. I am sure that most of us remember negative equity; Opposition Members have talked about rising house prices today, but I am sure that most people would agree that negative equity is far worse.

David Willetts: I begin by drawing the attention of the House to my entry in the Register of Members' Interests.
	As we come to the end of the debate on the Queen's Speech, perhaps as well as covering some of the Bills that are in the speech I might ask about one or two Bills that are not in it. We are in a strange position because we have all the Bills that have been announced in the Queen's Speech but if there is an election next May, as we have been told, very few of them are likely to come into law. [Hon. Members: "Who told you that?"] We know from Mrs. Blair. What greater authority could there be? There is also The Sun. If they agree, who are we to disagree? If we have Mr. Trevor Kavanagh and Mrs. Cherie Blair saying that it will be 5 May, I think we can work on the basis that that is quite likely.
	A great deal of legislation has been announced in the Queen's Speech that may never have the force of law, but I wonder whether the Secretary of State could cast any light on a measure that might well enter into law though it was not referred to in the Queen's Speech: the judicial pensions Bill. For some strange reason it was not referred to but there was then a press release from the Lord Chancellor's Department announcing it. It appeared on the Lord Chancellor's website as an item of legislation, but it has since been removed from that website.
	I am perplexed as to the status of the Bill. As it has "pensions" in the title and as the Secretary of State has "pensions" in his title, there might be a chance that he can tell us what is happening. We would be interested to hear from him about the status of the Bill. We very much look forward to watching Labour Members walk through the Division Lobby to vote for judges to have a pension of more than £1.5 million. I am sure they will enjoy that. I should make it clear that we, the Opposition, believe in good pensions for the many, not just the few. We look forward to hearing the arguments that the Secretary of State and his Front-Bench colleagues advance for special arrangements for the few rather than the many. That is one piece of legislation that may or may not come into law. We hope that the Secretary of State will explain the position.
	There is also the problem of age discrimination, to which the hon. Member for Wallasey (Angela Eagle) alluded. She set the Chamber alight with a reference to post- neo-classical endogenous growth theory, and went on to talk about the importance of tackling age discrimination following the European Union directive that was agreed several years ago. In a parliamentary answer on the subject—and I have checked this—the right hon. Member for Makerfield (Mr. McCartney), who used to be Minister for Pensions, said that legislation would be "forthcoming" in 2003. It has been forthcoming for an awfully long time, so it would be interesting to know from the Secretary of State for Work and Pensions what the timetable is. The Government have already failed to meet their objective of introducing draft legislation by the summer, so what is their position on age discrimination?
	The Queen's Speech, of course, includes an Identity Cards Bill. My right hon. Friend the shadow Home Secretary has already asked some telling questions about ID cards that need to be answered. The hon. Member for Sheffield, Hallam (Mr. Allan) made some powerful points about the issue, drawing on his expertise in IT projects. The introduction of identity cards would involve a major Government IT project—indeed, it would be one of the biggest in the country. I was wondering which member of the Government would want to have a word with the Home Secretary about running such projects. Perhaps it would be the Secretary of State for Work and Pensions, who could say a quick word about his success with the Child Support Agency computers. Perhaps the Paymaster General would like to chip in with her success with child tax credits. We have two ideal witnesses to testify to the success of large-scale IT projects, and I am sure that the Home Secretary would be interested to hear exactly how they have done it, and pick up tips from the CSA and child tax credit projects as he embarks on his even more ambitious project.
	The Government believe that they need to tackle the problem of insecurity, and the Home Secretary claims that his measures will increase our security. The theme behind several interventions and speeches today, however, is insecurity in the economic arena. Financial insecurity is at least important as physical security, and is an equally niggling anxiety. The Chancellor's record has exposed the British economy and individuals in the country to a range of insecurities, including the balance of payments deficit, the budget deficit, and the problems of economic inactivity and insufficient savings. It is a pity that he is not in the Chamber. [Hon. Members: "He has just arrived."] Ah, he has entered on cue, adding another touch of pantomime to the several that we have had in our debate. For example, his latest claim is that we are supposed to be responsible for £70 billion of cuts. As he becomes more desperate, so the figure grows absurdly large. His arguments, however, were demolished very effectively by my hon. Friends the Members for Hertford and Stortford (Mr. Prisk) and for Cotswold (Mr. Clifton-Brown).
	As the Chancellor is here, let me talk about the four imbalances in our economy that are a threat to the security that we all want our fellow citizens to enjoy. First, the balance of payments deficit, as my hon. Friend the Member for Arundel and South Downs (Mr. Flight) skilfully pointed out, is a crucial piece of evidence in a modern global economy. It shows that our economy faces demand far in excess of its ability to match it with supply. Even if we do not have growing inflation, a growing balance of payments deficit is evidence of an imbalance, and the Chancellor clearly lost the exchange with my hon. Friend.
	The second imbalance is the growing budget deficit. If the economy is doing so well, as the Chancellor claims, why is the deficit deteriorating steadily? Why, at this stage of the economic cycle, this year, can we see such a large fiscal deficit? It was disappointing that the Chancellor failed to engage with all the warnings that he was in danger of breaking his own golden rule. He seems to be in a world where we do not face any long-term fiscal problems as a result of his policies. Let me quote to him what he said on the "Today" programme on Monday 18 November. He said that
	"in the Euro area pensions expenditure is 10 per cent. of national income and is due to rise to 15 per cent. over the next 30 or 40 years. And that's why major reforms are taking place in pensions in Germany, France and elsewhere. But in Britain the picture is one where we have 5 per cent. of our national income spent on pensions. It is a perfectly sustainable position over the longer term."
	Does the Chancellor really believe that with his pensions policies, public expenditure on pensions will be 5 per cent. of our national income from now till kingdom come? It is already higher than that. If he read the Turner commission report, which brings together fully all the different items of expenditure on pensions and includes not just the basic pension but expenditure on all the means-tested benefits for pensioners and also public sector pensions, which he tries to hide away, he would see that the figure is already more than 6 per cent. and is forecast to rise still higher. With his policies, we are converging with Europe on one of the continent's worst problems—growing public expenditure on pensions. An earnings-linked pension credit going to three quarters of pensioners or more has not been factored into his calculations.
	It is not just the flow of expenditure but the liability and the stock of debt that are problems. The Chancellor talks about how he has brought down the national debt, and we heard that again from the Labour Benches. A truer measure of the national debt would include the liability to pay public sector pensions in the future. If the cost of public sector pension promises is included, the true national debt has risen under the Government by 5 per cent. of gross domestic product, as the expensive promises to pay public sector pensions have racked up.
	So we have problems on the balance of payments and on the fiscal policy. Let me speak briefly about unemployment and economic inactivity. We have heard from several Labour Members how unemployment has fallen, but more than half the fall in official unemployment has been offset by a rise in economic inactivity. There are more people who are economically inactive—out of the labour market—in Britain today than at any time for the past 20 years. People are being driven out of the labour market altogether. That is what is happening under this Government. The problem is affecting some of the groups that they claim to care about most.
	I am sure the Chancellor is familiar with table 14 of the labour market statistics produced every month. The figures for economic activity and inactivity show that for people aged under 25, the total number who are either unemployed and not in full-time education or economically inactive and not in full-time education is 1.112 million. That is a higher number of young people who are not working, studying or training than when the Government came to office in 1997. That is a lost generation of more than a million young people.
	The position is deteriorating. Despite everything we hear about the new deal for young people, the figures represent a deterioration on the position that the Government inherited. That is why we say that the new deal for young people is not working. We have heard in the past from the Secretary of State for Work and Pensions, and I must correct him. He has claimed:
	"We've virtually eradicated long-term youth unemployment".
	Again, on the Government's own survey measure, the latest figures show that there are more than 150,000 young people aged 18 to 24 who have been unemployed for more than six months. There is a problem of young people who cannot find jobs, who are out of the labour market, who are not studying, training or working, and it is a pity that the Government do not engage with that, instead of endlessly repeating their mantras about the new deal.

David Willetts: We have made it clear that we will reverse many regulations. I will not fall for a desperate attempt to divert me from my critique of this Government's failure to tackle inactivity and unemployment. I want to discuss the failure of the new deal for lone parents, which several hon. Members have discussed. The Chancellor may be one of the few people who reads with relish the evaluations of the schemes that he invents, but it is a pity that he does change his policies in light of the evidence.
	I shall quote an evaluation of lone parent work-focused interviews, which are an important part of the new deal for lone parents, published earlier this year. The research report by outside academics states:
	"The Introduction of Lone Parent Work Focused Interviews brought about no detectable change in exit rates from Income Support for eligible new or repeat claimants".
	That is the evidence about the failure of the Chancellor's schemes, which is why we are so sceptical.
	Finally, I shall discuss the pensions crisis and the amount that we, as a nation, are saving. I pay tribute to the Secretary of State for Work and Pensions, who has taken a novel and refreshing approach to his job. He has given up defending Government policy, and I wonder whether the Chancellor knows exactly what his colleague gets up to. I am not sure that the Granita pact permits the Secretary of State to make these statements, because I thought that it meant that the Chancellor determines such matters.
	On the pension credit, the Secretary of State has said:
	"we should not talk in euphemisms. It is a means test."—[Official Report, 13 October 2004; Vol. 425, c. 302.]
	and
	"It would be crazy to say"—
	that means-testing—
	"did not act as a disincentive to some people."
	At a conference, he admitted that the Government
	"still has a take up problem on Pension Credit."
	He has wholeheartedly endorsed all the arguments put by Conservative Members.
	This is the Secretary of State's most ambitious statement of the lot:
	"People feel there is no reward for playing by the rules, and one of the critical areas is pension provision. We have to bite the bullet and look at the state pension system, certainly for the longer term, so that if you do a lifetime's work, it will deliver a pension above the basic level of means-tested support."
	That is it. We would not abolish the pension credit, but we want to see a pension with a value higher than that of means-tested support. We welcome the Secretary of State's conversion, but it would be great to hear the Chancellor endorse his colleague's analysis of what is wrong with our pensions system.
	Conservative Members look forward to a constructive and reasonable debate about how we can gradually get pensioners off means-tested benefits, create incentives to save and tackle the problem of the 1.7 million pensioners who are entitled to pension credit but do not claim it. The objective should be to get a basic pension with a value higher than that of the pension credit, which is why we endorse the imaginative thoughts advanced by the Secretary of State for Work and Pensions. It is slightly unfortunate that those thoughts are not yet official Government policy, but given that the Chancellor is aware of his Secretary of State's strong views, it is only a matter of time.

Alan Johnson: The debate has been interesting and informative. At the outset, we found out that the right hon. Member for West Dorset (Mr. Letwin), the shadow Chancellor, has been a long-time advocate of independence for the Bank of England in setting interest rates—it was fascinating stuff. He presumably argued the case at dinner parties all over north or south London, and perhaps he grabbed strangers on long train journeys to tell them that it was the thing to do. When he entered the House as a Member of Parliament and went through the Lobby, however, he voted against independence for the Bank of England.
	The Chancellor ate the shadow Chancellor alive, but left a little bit over for cold sandwiches tomorrow.

Alan Johnson: I shall deal with that shortly. The hon. Gentleman made a thoughtful contribution and I shall tackle his point. Let me address his first point. The policy of Her Majesty's official Opposition is to restore the earnings link. Several hon. Members said that we should accept that, if we are to work, perhaps in a bipartisan way, genuinely to tackle the problems that the Pensions Commission set out, we must ensure that pensions are fair, equitable, attack pensioner poverty and are sustainable, not only now but in future.
	At the beginning of the debate on the Queen's Speech, my right hon. Friend the Member for Newport, East (Alan Howarth) intervened on the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) to say that Conservative policy on restoring the earnings link would mean a commitment of £98 billion in 2050. The right hon. and learned Gentleman replied:
	"I think that . . . pensioners are more interested in the real difficulties that they face today than in what might happen in 2050."
	I despair. If the Conservative party does not consider the sustainability of its policy, it betrays future generations of pensioners and taxpayers.
	Of course, the Conservative party removed the link with earnings. The hon. Member for Havant said only two years ago that restoring the earnings link would be an expensive error, but more recently he said that withdrawing the link had been a mistake. However, when it was pointed out to the Leader of the Opposition that he was a member of the Cabinet when the earnings link was withdrawn, he said:
	"It was the right thing to do then, and restoring the link is the right thing to do now."—[Official Report, 23 November 2004; Vol. 428, c. 17.]
	When will it be the right time to break the link again? It is already unsustainable, not only in 2050 but in four years. There is a gap of £500 million in Conservative funding plans. Conservative Members say that they will sustain the link for four, not five years.

Bernard Jenkin: It is my privilege and honour to present a petition bearing more than 1,000 names taken in my constituency. It expresses the anger and frustration that many people feel about the Government's disjointed policy on Travellers sites and travelling people. The petition states:
	To the House of Commons
	The petition of residents of North Essex,
	Declares that Colchester Borough Council and Essex County Council have been forced to consider locating permanent travellers' sites on greenfield areas—where no development would normally be allowed and which would damage the value of surrounding properties—because, in the absence of a designated site, travellers and others have acquired excessive rights to occupy and spoil private land in the area.
	The petitioners further declare that Colchester Borough and Essex County Councils should reject proposals for a travellers' site at Severalls Lane or the Crown Interchange just north of Colchester.
	The petitioners therefore request that the House of Commons calls upon the Deputy Prime Minister to introduce legislation to enable local councils to protect the interests of those they are elected to serve, including genuine travelling people, by transferring to local councils complete responsibility for Travellers and their activities within their local areas.
	And the petitioners remain, etc.
	To lie upon the Table.

David Kidney: No one could reasonably say that coroners' courts are not important. When the Harry Stanley inquest said that Mr. Stanley was unlawfully killed, it threw into crisis the whole of the Metropolitan police's armed police response in London. When the coroner in the inquest on Joseph Scholes' death wrote to the Home Secretary requesting a public inquiry, it cast a spotlight on the dangers of suicide when we lock up children in detention. If our system for registration of deaths and coroners' investigations is inadequate, the impact can be severe. To illustrate, I pose this question: could we not have detected sooner the murderous activities of the general practitioner Harold Shipman? I add immediately that the third report of the Shipman inquiry made it clear that it was not the individuals working in the system who were to blame for Dr. Shipman's long run of murdering patients in Hyde, but the system itself.
	I asked for this debate precisely because coroners' courts are important. Alongside the registration of deaths, they should provide a reliable system for collecting data on deaths and monitoring trends in deaths. They should provide an adequate investigation into suspicious deaths, to uncover wrongdoing or to provide reassurance as appropriate. They should provide also a thorough and sensitive service for the relatives of those who die suddenly and unexpectedly. Indeed, they should provide advice and guidance to us all on how to prevent avoidable deaths. They should provide the means of dealing with inquiries into mass deaths after major disasters.
	The present system does not have the appearance of a modern and effective service able to respond to public concerns over deaths, whether of individuals or of groups, and to command public confidence. Nor does the Government's response to the reports that have exposed the failings of the present system and made recommendations for reform, which I shall come to, suggest that they are giving to the improvement of the system the priority that its importance demands.
	In criticising the current state of the system for registering deaths, investigating them and holding inquests, I am not making any adverse judgment on the 120 or so coroners—their number fluctuates, but there are 23 full-timers—and their support staff and investigators. I am sure that most of them are hard-working and dedicated, but they are working with statutory powers and procedures that were established in a different era.
	It is my case that there are serious and obvious flaws in the current arrangements, and that those have been drawn repeatedly to the Government's attention. Yet the Government have not acted to put them right with the urgency that the situation requires. Action is required at two levels, legislative and administrative. I can understand that securing a slot in the Government's legislative programme may take time, but there is no reason why the urgency of the need for change cannot start to be met by administrative actions straightaway.
	I move on to the reports that show the need for reform. I shall call the first one the Luce report, after Mr. Tom Luce, the former head of social care policy in the Department of Health, who chaired the review team for the report called "Death Certification and Investigation in England, Wales and Northern Ireland—The Report of a Fundamental Review 2003", Cm. 5831. At the front of the report is printed the review team's letter to the Home Office, dated 28 April 2003, which states:
	"During the last three-quarters of a century, the Government has twice commissioned reviews of these subjects, in 1936 and 1965. Very little happened in response to their reports. The services are showing the consequences of this neglect."
	The first lines of the report read:
	"The systems in England, Wales and Northern Ireland for the certification of most deaths by doctors and the investigation of others by coroners have been seriously neglected over many decades. They must undergo radical change if they are to become fit for the purposes of a modern society and capable of meeting future challenges. The need for reform is widely recognised and supported."
	I would add to that that there are other high-profile cases that demonstrate the need for an effective system to be in place. I have already mentioned the case of Harold Shipman, whose unlawful killings were counted in hundreds. To that I would add great disasters like the Bowbelle/Marchioness incident, and more recently the rail crashes at Ladbroke Grove and Potters Bar.
	In addition to these obvious demands for a modern service there are linked issues demanding a strategic response from a modern coroner system. For example, article 2 of the European convention on human rights is about a state's obligation to protect the lives of its citizens, which the courts have ruled implies an obligation to investigate deaths. There is the White Paper entitled "Civil Registration: Vital Change", and registration changes are happening now. A more weighty inquiry is needed where there are deaths capable of causing serious damage to public confidence—for example, the death of the Government scientist, David Kelly. Perhaps not everyone appreciates this, but the Hutton inquiry into the allegations surrounding the death of David Kelly was also the inquest into his death, thanks to an addition to the Access to Justice Act 1999 that was well secured by my hon. Friend the Member for Hendon (Mr. Dismore).
	Most recently, the inquiries into the Shipman deaths provide more evidence for my arguments. The third report surveyed the present state of the coroners service and described coroners' resources as varying widely. It mentioned that some coroners worked from home. It describes a situation in which there is virtually no training, and the training that is available is not compulsory. It says that coroners operate in isolation, and receive little advice or guidance. There is no leadership structure and no reasonable process for complaints and appeals. In fact, a coroner's inquest can be challenged only through judicial review. The Shipman inquiry said that coroners should have consistent quality standards, training, leadership, a wider range of investigative methods and greater powers.
	As for handling of the reports in the media, an article in The Guardian on the Luce report carried the headline, "Coroners face big shake-up after 800 years". It said that the report recommended a package of sweeping reforms—bereaved relatives would have much stronger rights at inquest, and coroners would be able to deliver fuller verdicts. It talked about the "forgotten" coroner service, and pointed out that it needed radical change after decades of neglect. My hon. Friend the Under-Secretary of State for the Home Department, the Member for Wythenshawe and Sale, East (Paul Goggins), who will respond to the debate tonight, is quoted as saying:
	"The shortcomings in the current system have been increasingly evidenced and it is essential that we build an effective, supportive and transparent system that commands public confidence".
	The Guardian began an article on the third report of the Shipman inquiry thus:
	"All deaths, including those that do not appear suspicious, must be investigated to ensure that murders such as those committed by Britain's worst serial killer, Harold Shipman, do not go undetected".
	Dame Janet Smith, who presided over the inquiry, identified an urgent need for a more focused, professional and consistent approach to coroners' investigations. She said:
	"There must be radical reform and a complete break from the past, as to organisation, philosophy, sense of purpose and mode of operation".
	In a joint statement, the Home Secretary and the Secretary of State for Health said that work was already under way to identify how best to reform the coroner system.
	Eventually, in March this year the Home Office produced a position paper proposing a coherent system based on full-time coroners with legal qualifications, closely supported by appropriate medical expertise, together with tighter rules for death certification, notification of all deaths to coroners and stronger support for scrutinising cases and investigation where necessary. A coroner and burial team was set up. In a news release, the Minister said:
	"The proposals outlined today will introduce a new system that will combine an independent check on all deaths and a professional oversight of death patterns with, for the majority of cases, the minimum of bureaucracy".
	A BBC news report on the Home Office plans suggested that those changes had taken place. It said that all deaths would be referred to an independent medical examiner and that a wide-ranging review would result in the numbers falling from 127 part-time coroners to a total of 40 to 60 full-time coroners. Coroners have been handed new powers to seize documents, and the reforms will change the way in which verdicts are recorded, doing away with terms such as "suicide" and "misadventure" and replacing them with a short narrative account of the facts of the death.
	The Minister was reported as saying that the proposals would prevent an individual doctor from being able to ensure that someone was buried without any further scrutiny within the system. He said that that was "a huge step forward". What has happened since March 2004, and what urgency has been ascribed to this policy area by the Home Office? In September the independent support group INQUEST described the position paper as "aspirational" and drew attention to the lack of clearly stated commitments. It expressed concern because any changes were expected to take place within existing budgets and without any new money. The Luce report, however, recommended a series of reforms which, it estimated, would cost an additional 10 per cent. over and above the current £70 million budget for coroners' courts.
	Will the Minister explain what has been done since March 2004? Which of the proposals in the position paper have been put into practice? What is still to be done before new legislation is introduced? The Luce report helpfully includes a section on what can be done without waiting for a new Act of Parliament. NHS doctors could be allocated to work in an advisory capacity with the registration service and local coroners. The existing coroners' rules could be changed to reflect the recommendations on the outcome, conduct and scope of inquests. The registration service, the Home Office and the chief medical officers could give guidance on the use of autopsies. Here I interpose that in the third report of the Shipman inquiry, it is said that the immediate resort to autopsies by coroners is undesirable, and some coroners' autopsies are "seriously deficient".
	As further examples of what can be done now, a new charter of standards of service to families could be produced. Training programmes for coroners' officers should be introduced with some support from central funds, and the development of new training arrangements for coroners themselves could be started. Informal piloting of death certification changes could be started. A new coronial council could be appointed on an informal basis and asked to oversee progress with the reforms. That is an excellent idea. The report states on page 219:
	"All these changes could be made in advance of new legislation and all would be very worthwhile."
	I am asking for reassurance. Will my hon. Friend the Minister reassure me and the public at large? I am talking about the relatives of those who die tragically in suspicious circumstances, in the custody of the state or in a terrible disaster; the technical and expert groups such as the Office for National Statistics, which collects and publishes the data on deaths, and the Health and Safety Executive, which has responsibility for preventing avoidable deaths at work; the organisations that work professionally with the coroners, such as doctors, police and prosecutors; and the media and all those who have a legitimate interest in the process and outcome of coroners' investigations?
	When will we have a modern coronial jurisdiction with national coherence? Will we have a standing rules committee, a coronial council and an inspectorate? Will we have a nationally consistent complaints procedure, an appeals process and compulsory training? Can my hon. Friend tell me that defects in coroners' powers as identified in the reports that have been published will be remedied, and that in future coroners will not solely be reactive, but will be able to investigate any death or group of deaths on their own initiative, making recommendations that may avert further deaths from similar causes in future?
	Can my hon. Friend tell me that in future, coroners will have the back-up that they need for expert medical input and effective investigations, and that families will by right have access to reports and to investigators, and that they will be accorded the assistance and the respect to which they are entitled throughout the investigative process, including at an inquest, if one is held? Will he tell me when all this will happen? Can he tell me that that will be soon? It is urgent. Can he tell me that the media will be able to report those actions as fact, because they will be fact?
	When my hon. Friend says that he remains committed to taking urgent action, when he reassures all those with an interest in the coroners' court system, especially the families of the deceased, the coroners and their staff, that he is constantly on their case, and when he says that he is determined to see through radical reform in a timely and cost-effective way, I will be satisfied that this debate is worth while, and that some good will come of it.

John Burnett: I am grateful to the Minister and to the hon. Member for Stafford.
	In rural areas, there are sometimes very few suitable venues for coroners to hear their courts. Will the Minister lean on the Lord Chancellor and his Department when people who run the Crown courts, magistrates courts or county courts seek to oust a coroner from using a court although no suitable alternative accommodation is available?

Paul Goggins: I am aware that sometimes locating a suitable venue for an inquest can be problematic. That remains a responsibility for the local authority. None the less, in Government we do of course try to assist and support coroners where they have a particular difficulty. All they need do is approach us, and if we can help, we will.
	As all Members have emphasised, we have much to learn from the experiences of families. Indeed, some of the most instructive and compelling evidence that I have received came during two discussions that I was fortunate enough to have with the families of Harold Shipman's victims—people who have more reason than most to know of the shortcomings of the present system and who expressed themselves to me with remarkable clarity and calmness given the circumstances. I am extremely grateful to my hon. Friend the Member for Stalybridge and Hyde (James Purnell) for arranging those important opportunities for me to meet them.
	Under our proposals we will, for the first time, have a national system to oversee all deaths. In order to provide focus and direction for that new service, we will create a new post—a chief coroner, who will lead the service by setting and driving up professional standards, deploying coroners within the national service, and, where necessary, undertaking the most complex cases himself or herself. The chief coroner will also have statutory powers to give directions to coroners in the interests of consistency and good practice.
	There will also be a chief medical adviser, who will have particular functions in relation to the medical examiners and will ensure that the new service has access to the best possible medical expertise.
	The chief medical adviser will provide top level medical advice to the chief coroner and link the new service with the regional directors of public health, who will provide additional oversight and scrutiny.
	As I said earlier, we plan to publish a White Paper early next year. That will set out the basis on which we intend to legislate—as soon as parliamentary time is available—for a unified and reformed system.
	We are carefully considering the resources that we will need. My hon. Friend the Member for Stafford mentioned that. Our position paper expressed the hope that, in broad terms, the changes would be cost-neutral. Further detailed analysis suggests that there may be a need to identify further funding, over and above the blocks of funding that local authorities and the police allocate to the coroner service and coroners' officers. Given that those funding arrangements were designed to cope with around 200,000 deaths a year, while the new service will be required to deal with approximately 500,000, that should not be too surprising. We are, of course, examining the efficiency savings that will accrue.
	We are also considering some of the payments made in the current system, including, for example, the £30 million paid privately to doctors for providing certificates prior to cremation, to ascertain whether some of that money could help improve the scrutiny that families clearly expect. All that will be clearly set out in the White Paper.
	As my hon. Friend said, we can do a great deal in advance of a fully reformed system and some of that work has already started. We are working closely with coroners to increase the focus of the service on bereaved families—many coroners already consult families as a routine part of their investigations. I am delighted with the way in which several coroners are taking that work forward. They are seriously considering the way in which families and others receive information about a death and how communications can be improved. I know that some coroners are reviewing the leaflets that they provide and are in discussion with groups and others who work with the bereaved to ascertain what improvements they could make.
	In the longer term, building on such work, we will develop a family charter to set out the service standards that can be expected throughout England and Wales. We are also promoting the sharing of good practice. Using modern techniques developed by the Coroners Society of England and Wales, coroners are already making far more use of each other's experience. At the Home Office-funded training courses for coroners, we are making sure that sharing good practice is built into each course.
	I pay tribute to the coroners for the way in which so many have made real strides in ensuring that their work and that of their staff meets the increasingly high standards that the public and central Government now expect. Working with local authority funders and local police forces, many coroners have made significant progress in their case management systems and their approach to inquests—especially those that take a long time to arrange—in reviewing their performance and making sure that they work closely with other local services. For example, many coroners have been actively reviewing the number of post mortems that they request, and others have been developing important new links with registrars and primary care trusts as well as with voluntary groups who can support the bereaved.
	As I explained earlier, the next milestone in our programme is publication of a White Paper. That will set out the details of our reform programme. We will need primary legislation to give us the powers that we need and we will also need to develop the necessary professional leadership in the form of a chief coroner and a coroners council.
	I reiterate the Government's full commitment to the delivery of fundamental coroner and death certification reform at the earliest opportunity—
	The motion having been made after Seven o'clock, and the debate having continued for half an hour, Mr.   Deputy Speaker adjourned the House without Question put, pursuant to the Standing Order.
	Adjourned at thirteen minutes past Eight o'clock.